On Tuesday, the US Dollar maintained its strength against major currencies despite the release of mixed US economic data. The ISM Manufacturing Purchasing Managers Index (PMI) for August fell to 54.6 from 55.6 in July, missing the market consensus of 55.2, but remained above the 50 threshold, signaling continued expansion in US manufacturing activity at a slower pace [1][2][3]. The ISM Prices Paid Index stayed unchanged at 71.1, indicating persistent price pressures [1][2][3]. The Employment Index declined to 51.2 from 52.8, and the New Orders Index eased to 53.7 from 56.7 [1]. Meanwhile, the Job Openings and Labor Turnover Survey (JOLTS) showed job openings rising to 7.271 million in July from 7.182 million in June, slightly below the 7.3 million expected [1][2]. However, Source 3 reports the figure as 7.217 million, highlighting a minor discrepancy in the data [3]. Hires and separations remained little changed at 5.1 million [1].
Despite these softer-than-expected figures, the US Dollar Index (DXY) posted gains around 99.65-99.64, up 0.23% on the day, reflecting persistent expectations of a Federal Reserve rate hike in September. The CME FedWatch Tool indicated a 66% probability of a rate hike at the September 15-16 meeting, bolstered by Fed Chair Kevin Warsh's hawkish stance on inflation at the Jackson Hole Symposium [2][3]. Warsh stated that the Fed still has "work to do" regarding price stability [3].
The New Zealand Dollar (NZD/USD) traded around 0.5900, down 0.24% on the day, remaining under pressure as investors awaited the Reserve Bank of New Zealand's (RBNZ) monetary policy decision. Analysts at ING expect a widely anticipated 25bp hike to 2.75%, with market reaction hinging on the tone of the RBNZ's guidance and updated projections. ING sees downside risks for NZD, noting that current market pricing for rate hikes is too hawkish and expects CPI projections to be revised lower due to softer oil prices [1].
The Australian Dollar (AUD/USD) traded at 0.7157, down 0.11%, with the pair range-bound amid competing hawkish expectations for the Fed and the Reserve Bank of Australia (RBA). Elevated oil prices and sticky inflation in Australia have prompted three rate hikes earlier this year, and hotter-than-expected July CPI data strengthen the case for further tightening. The Aussie also drew support from upbeat Chinese data, with China's RatingDog Manufacturing PMI rising to 51.5 in August from 50.9 [2]. Attention now turns to Australia's second-quarter GDP data, due Wednesday [2].
The British Pound (GBP/USD) traded at 1.3540, down 0.06%, as traders weighed US PMIs, jobs data, and Bank of England (BoE) risks. UK retail prices rose the most since 2024, driven by higher energy and commodity costs, while manufacturing activity expanded at its slowest rate since March. BoE MPC member Catherine Mann advocated for higher rates, and money markets priced in an 82% chance of a rate hike by the end of 2026 [3]. Technical analysis suggests GBP/USD holds a bullish bias above key support levels, with immediate support at 1.3481 and resistance at higher levels [3].
Market participants are now focused on upcoming central bank decisions and economic releases, including the RBNZ announcement, Australia's GDP data, and US jobs and ISM Services PMI figures later in the week [1][2][3].
CONCLUSION
Mixed US economic data failed to trigger a reversal in the US Dollar, which remains resilient amid persistent rate hike expectations. Major currencies like the NZD, AUD, and GBP traded lower or sideways, with market attention shifting to upcoming central bank decisions and economic releases. The outlook remains cautious as traders await further guidance from the Fed, RBNZ, RBA, and BoE.