The Australian Dollar (AUD) slipped against the US Dollar (USD) during Monday's American session, with the AUD/USD pair extending its pullback toward the 0.6990 area after the release of stronger-than-expected US ISM Manufacturing data. Earlier in the week, the pair had rallied above 0.7050 but failed to sustain gains as investors reassessed the Federal Reserve's outlook in light of resilient US economic activity [1].
The ISM Manufacturing Purchasing Managers Index (PMI) for July rose to 55.6, surpassing market expectations of 54.0 and improving from June's reading of 53.3. The New Orders Index also increased to 56.7 from 56.0, indicating robust demand in the manufacturing sector. Meanwhile, the Prices Paid Index eased to 71.1 from 73.0, suggesting that while inflationary pressures persist, there is some moderation compared to the previous month [1].
The upbeat ISM data prompted a rebound in US Treasury yields and strengthened the US Dollar, putting pressure on risk-sensitive currencies such as the Australian Dollar. However, the softer Prices Paid reading could temper expectations for a more aggressive Federal Reserve stance if inflation continues to cool [1].
Looking ahead, market participants are focused on the upcoming release of Australia's final S&P Global Services and Composite PMIs for July. Both indices are expected to remain unchanged at 53.0 and 52.6, respectively, signaling modest but steady expansion in private-sector activity. Additionally, attention is on China's RatingDog Services PMI, forecast at 53.7 for July, which, while slightly lower than June's 54.1, remains above the expansion threshold. These data points could influence the AUD's direction depending on whether they surprise to the upside or downside [1].
From a technical perspective, AUD/USD trades at 0.6993, just below the 20-period Simple Moving Average (SMA) at 0.6997 and above the 100-period SMA at 0.6984, indicating a broadly neutral near-term tone with slight downside risk. Key support is seen at 0.6985, while resistance levels are clustered between 0.6997 and 0.7018 [1].
CONCLUSION
Stronger-than-expected US ISM Manufacturing data has weighed on the Australian Dollar, pushing AUD/USD lower as the US Dollar strengthened. Market participants are now watching upcoming Australian and Chinese PMI releases for further direction, with technical indicators suggesting a neutral to slightly bearish outlook in the near term.