AUD/USD extends its upside below 0.6600, Australian Retail Sales data eyed
- AUD/USD attracts some buyers on the weaker USD.
- The US flash S&P Global Composite PMI for November was unchanged at 50.7 vs 50.4 expected.
- RBA Governor Michele Bullock stated that tighter monetary policy is the appropriate reaction to demand-driven inflation.
The AUD/USD pair extends its upside during the early Asian session on Monday. The uptick of the pair is bolstered by the decline of the US dollar (USD) following the mixed S&P Global PMI data. The pair currently trades around 0.6583, down 0.08% on the day.
On Friday, the US flash S&P Global Composite PMI for November was unchanged at 50.7 versus the expectation of 50.4. Meanwhile, the Services PMI rose to 50.8 in November from 50.6 in October, above the market consensus of 50.4. The Manufacturing PMI eased to 49.4 from 50.0, worse than the 49.8 estimated. Economists anticipate overall economic growth to moderate considerably this quarter as the lag effects of the Federal Reserve's hike begin to have a greater impact. Markets are confident that the Fed will not raise the interest rate in December and expect four rate cuts in May of 2024. This, in turn, weighs on the USD and acts as a tailwind for the AUD/USD pair.
On the Aussie front, the hawkish stance from the Reserve Bank of Australia (RBA) boosts the Australian Dollar (AUD). RBA Governor Michele Bullock said tighter monetary policy is the appropriate reaction to demand-driven inflation.
Furthermore, the optimism that the Chinese government will continue to support the property sector has boosted the confidence of investors. That being said, the positive outlook about the Chinese economy lends some support to the China-proxy Aussie.
Looking ahead, market participants will monitor the Australian Retail Sales, RBA Bullock's speech, and the monthly Consumer Price Index (CPI) for October. On the US docket, the US housing data, Consumer Confidence, GDP, and ISM Manufacturing PMI will be released.