The AUD/USD was set for a mute ending of the week after a decline in Australia’s both manufacturing and services PMI. The pair was trading at 0.73731.
Australia’s Economic Concerns
The IHS Markit Flash Australia Composite Output Index dipped to a 14-month low and recorded the first decline since August 2020. The heightened lockdown restrictions in Victoria have heavily weighed on Australia’s economic performance.
Movement restrictions in various states in Australia has affected overall private sector output. The growth streak in the private sector snapped in July amid the Delta variant concerns and strict Covid-19 restrictions.
Demand softened significantly in July while new manufacturing orders advanced. Manufacturers reported a slowdown in supply which saw work outstanding rise for the eighth consecutive month. The Flash Composite Output index dipped to 45.2 in July from the previous 56.7 in June.
The Flash Services Business Activity Index recorded the first contraction in 11 months in July. The index came in at 44.2 in July from 56.8 in June. This was the lowest level since March 2020. The tightening of movement restrictions saw the demand for both domestic and foreign services contract sharply.
The Manufacturing PMI for July fell to 56.8 from 58.6 in June. New orders and output advanced for the thirteenth consecutive month, albeit at a slower pace.
US Economic Stance
The AUD/USD pair edged higher on Thursday despite the disappointing US weekly initial jobless claims data. The initial jobless claims for the week ending July 17 increased 51,000 to 419,000. The previous week’s level was revised up by 8,000 to 368,000.
Economists polled by Dow Jones expected the initial claims to drop to 350,000. The surging coronavirus cases has had many in fear of their health.
Inflation in the US has continued to gradually increase. However, the Federal Reserve stated that it would not taper its monetary policy until the economy signaled a stable uptrend.