Key Moments
- AUD/USD trades near 0.6980 and logs a sixth straight session of losses during Asian trading on Tuesday.
- Australia’s preliminary S&P Global Manufacturing PMI rises to 51.2 in June, while Services and Composite PMIs remain just below 50.
- Markets fully price in a 25-basis-point Federal Reserve rate hike in September after a more hawkish-than-expected policy outlook.
Australian Dollar Weakens Despite Brighter PMI Signals
AUD/USD continues to decline for a sixth consecutive session, with the pair trading around 0.6980 during Asian hours on Tuesday. The move comes even as the latest preliminary S&P Global PMI data for Australia point to an improvement in business conditions.
Market participants are directing their focus toward upcoming Australian inflation and labor market reports later in the week, which could provide further guidance on the domestic economic outlook and policy expectations.
PMI Data Show Manufacturing Back in Expansion
According to figures released by S&P Global on Tuesday, Australia’s preliminary S&P Global Manufacturing PMI increased to 51.2 in June, up from 50.7 previously, signaling expansion in the manufacturing sector.
The services side of the economy also showed signs of stabilization. Services PMI climbed to 49.9 in June compared with 48.7 in the prior reading, while the Composite PMI improved to 49.8 from 48.7. Although still fractionally below the 50 threshold, the services and composite readings indicate that activity is moving closer to neutral.
| Indicator | Period | Actual | Previous | Consensus | Release Time | Frequency | Source |
|---|---|---|---|---|---|---|---|
| S&P Global Manufacturing PMI (Prel) | June | 51.2 | 50.7 | – | Mon Jun 22, 2026 23:00 | Monthly | S&P Global |
Fed’s Hawkish Tilt Supports the US Dollar
The Australian currency is coming under pressure as the US Dollar (USD) strengthens on the back of a more hawkish Federal Reserve policy outlook. Updated economic projections and remarks from Kevin Warsh, who presided over his first meeting as Fed Chair, were interpreted as firmer on tightening than markets had anticipated.
As a result, futures markets have fully priced in a 25-basis-point rate increase for the September meeting, with a smaller probability assigned to a potential move as early as the following month.
Risk Sentiment and Geopolitical Developments
The US Dollar may face headwinds from improving risk appetite, with investor sentiment supported by ongoing peace efforts between the US and Iran. Those talks have contributed to easing concerns over inflation.
CNBC reported on Tuesday that US Vice President JD Vance said negotiations have made “great progress,” even though some friction remains in the process.
What the Manufacturing PMI Measures
The S&P Global Manufacturing Purchasing Managers Index (PMI) is released monthly and serves as a leading indicator of business conditions in Australia’s manufacturing sector. It is derived from surveys of senior executives at private-sector firms, who report whether conditions have improved, worsened, or stayed the same compared with the prior month.
Readings range from 0 to 100. A level of 50.0 indicates no change in activity versus the previous month. Values above 50 are generally associated with expansion in manufacturing output, typically viewed as supportive for the Australian Dollar (AUD), while readings below 50 point to contraction, usually considered negative for AUD.
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