Australian Dollar Steady as Trade Surplus Narrows

Key Moments

Range-Bound AUD/USD After Data Releases

The AUD/USD pair is trading sideways during the Asian session on Thursday, unable to extend the prior day’s rebound from the 0.7120 area, which marked a nearly two-week low. The exchange rate is confined to a narrow range and is holding just above the mid-0.7100s following the publication of Australian trade figures and China’s RatingDog Services PMI.

According to the Bureau of Statistics, Australia recorded a trade surplus of A$1,923M in July. This compares with a revised surplus of A$2,341M for the previous month and comes in ahead of market expectations of A$1,390M. Despite the stronger-than-forecast surplus, the impact on the Australian Dollar has been limited.

In China, the RatingDog Services PMI improved to 51.4 in August from 50.4 in July, surpassing the consensus forecast of 50.6. The data points to an expansion in Chinese services activity, yet it has failed to generate strong follow-through demand for the AUD/USD pair.

Policy Expectations Support Both AUD and USD

Market participants continue to price in a higher probability that the Reserve Bank of Australia will move toward further policy tightening. Expectations for an RBA rate increase have strengthened after July inflation readings came in hotter than anticipated and second-quarter Gross Domestic Product exceeded forecasts. These developments have underpinned the Australian Dollar and contributed to its relative resilience.

At the same time, the US Dollar is being supported by growing expectations that the US Federal Reserve will raise interest rates at its policy meeting later this month. In addition, escalating US-Iran tensions are lending some safe-haven support to the greenback, helping it halt the prior day’s decline that followed weaker US ADP data. This firmer USD tone is acting as a counterweight to AUD strength and is limiting upside in AUD/USD.

Traders are now shifting their attention to the upcoming US ISM Services PMI release due later in the day, followed by the US Nonfarm Payrolls report on Friday, which could provide clearer direction for the pair.

Technical Picture: Mildly Bullish Bias Above Key Support

On the 4-hour chart, AUD/USD is holding above the 100-period Simple Moving Average, which is acting as a pivotal support area and keeping the short-term bias slightly constructive. As long as the pair remains above the 0.7130 support zone on any dips, the technical setup favors the possibility of further upside consolidation.

A clear break below 0.7130 would likely trigger additional technical selling and could open the door for an extension of the ongoing corrective move lower from the multi-month high reached in August. On the topside, a sustained move and clear acceptance above 0.7200 is seen as necessary to reinforce prospects for a more meaningful appreciation in the pair.

Key AUD/USD Technical Levels

China RatingDog Services PMI: Indicator Overview

The RatingDog Services Purchasing Managers Index (PMI), released monthly by Caixin Insight Group and S&P Global, tracks business activity in China’s services industry. It is based on survey responses from senior executives at both private and state-owned firms, assessing changes in the current month relative to the previous month.

Readings on the index range from 0 to 100, with the 50.0 level indicating no change from the prior month. Values above 50 point to an expansion in services activity and are typically viewed as positive for the Renminbi (CNY), while readings below 50 signal contraction and are generally considered negative for CNY. The indicator can provide early signals on trends in metrics such as Gross Domestic Product, industrial production, employment, and inflation.

Latest RatingDog Services PMI Reading