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Turning to AUD/USD, private sector PMIs influenced Aussie dollar demand and sentiment toward the RBA rate path. The all-important Judo Bank Services PMI rose to 51.2 in March, up from 50.8 in February.
With services accounting for around 75% of Australian GDP, an upswing in service sector activity may temper RBA rate cut bets. March data showed faster services inflation and job creation. A tighter labor market could lift wages, fueling consumption and inflation, which may support a less dovish RBA stance.
The AUD/USD responded positively, rising from $0.62629 to $0.62865.
Australian Dollar Daily Outlook: Services Sector Drives Rate Differentials
In the US session, the S&P Global Services PMI could affect the US-Aussie interest rate differential.
A higher Services PMI reading could signal a more hawkish Fed rate path, widening the interest rate differential in favor of the US dollar. A wider rate differential could drag the AUD/USD pair toward $0.62.
However, an unexpected slide in the Services PMI could narrow the rate differential, potentially driving the AUD/USD pair toward $0.63.
Beyond the data, President Trump’s tariff policies need consideration. Rising tariffs could weigh on global trade and risk sentiment, negatively impacting commodity currencies such as the Aussie dollar.
