The AUD/USD pair exhibited positive momentum on Thursday, continuing its rebound from the 0.6460-0.6455 range, marking its lowest point since November 2022.

As the North American session unfolds, the pair maintains its upward movement and presently hovers near the upper boundary of the daily trading range, around 0.6530-0.6535.

Surprisingly, a private survey reveals that China’s manufacturing sector experienced modest growth in May. This unexpected development, coupled with the anticipation of the Reserve Bank of Australia (RBA) tightening its monetary policy, provides a boost to the Australian dollar (AUD).

RBA Governor Philip Lowe recently cautioned about persistent inflationary pressures, suggesting the possibility of additional interest rate hikes. These remarks align with the release of robust domestic consumer inflation figures. Adding to the AUD/USD’s strength is the slight weakness in the US Dollar (USD).

Following an initial rise, the USD faces selling pressure, stepping back from its mid-March high reached on Wednesday. This retreat is influenced by diminishing expectations of a 25 basis points rate hike by the Federal Reserve (Fed).

Notably, two members of the FOMC expressed willingness to pause interest rate hikes this month. Consequently, US Treasury bond yields plummet intraday, contributing to the USD’s decline and supporting the AUD/USD pair.

Conversely, despite the release of better-than-expected data from the US ADP report, which indicates the addition of 278K private-sector jobs in May compared to the projected 170K and the previous month’s 296K, the USD bulls remain unenthused.

However, concerns about a global economic slowdown, particularly in China, have led to a risk-off sentiment that could favor the safe-haven USD and pose a challenge for the AUD, which is sensitive to risk. Consequently, cautious optimism is advised for bullish traders, allowing for potential appreciation in the future.


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