Aussie Dollar Gains as Traders Weigh China PMI, Fed

Key Moments

China Data Leaves Australian Dollar Largely Unmoved

AUD/USD is trading slightly higher around 0.7160 during Monday’s Asian session, recovering part of an earlier bearish gap yet still remaining in negative territory. The pair is broadly steady as the Australian Dollar (AUD) shows only limited reaction to the latest Chinese National Bureau of Statistics (NBS) Purchasing Managers’ Index (PMI) figures. Given the strong trade linkage between Australia and China, shifts in China’s economic backdrop often reverberate through AUD performance.

China’s Manufacturing PMI from the NBS came in at 49.8 in August, up from 49.2 previously and above the market expectation of 49.7. The NBS Non-Manufacturing PMI was unchanged at 49.0 in August, matching July’s 49.0 reading.

Domestic Inflation Gauge Rises on Annual Basis

On the Australian data front, the TD-MI Inflation Gauge increased to 4.8% year-over-year in August, compared with 4% in July. However, the monthly reading eased to 0.5%, down from 1% in the prior month, pointing to a slower pace of price gains on a month-to-month basis.

Fed Rhetoric and Rate Expectations Cap AUD Upside

Further appreciation in AUD/USD may face resistance if the US Dollar (USD) stages a recovery following hawkish commentary from Federal Reserve (Fed) Chair Kevin Warsh. Speaking on Friday at the Jackson Hole symposium, Warsh cautioned that policymakers will “have work to do” if they were not confident that cost-of-living pressures were easing for US households. He stated, “We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed,” and reiterated, “Otherwise, we have work to do.”

The Fed’s next interest rate decision is scheduled for September 15-16. Market pricing, based on the CME FedWatch tool, now reflects nearly a 57.5% chance of at least a 25 basis points (bps) increase next month, up from 35% prior to Warsh’s speech, indicating a notable shift in expectations toward tighter policy.

Technical Picture: Bullish Bias but Key Supports in Focus

On the daily chart, AUD/USD is trading at 0.7160, extending gains above both the nine-day and 50-day Exponential Moving Averages (EMAs). With price holding above these short- and medium-term EMAs, the configuration suggests a constructive near-term bullish tone. The 14-day Relative Strength Index (RSI) is hovering near 63, supporting positive momentum while stopping short of flagging overbought conditions.

Initial technical support is seen at the nine-day EMA around 0.7152, with a stronger dynamic support zone at the 50-day EMA near 0.7067. A more pronounced decline would shift attention toward previously identified horizontal support at 0.6667. As long as AUD/USD trades above the clustered EMA area, buyers are likely to maintain the upper hand in the daily trend structure.