The Australian dollar weakened to levels not seen in nearly three months against the US dollar, with the AUD/USD pair trading around the 0.6500 mark during early Asian sessions. The decline came as currency markets positioned cautiously ahead of two major events: the release of the Reserve Bank of Australia’s (RBA) December meeting minutes and China’s Purchasing Managers’ Index (PMI) data.
A broadly stronger US dollar, fueled by expectations that the Federal Reserve may keep interest rates elevated for longer, added to the Aussie’s headwinds. Risk-off sentiment and mixed signals from commodity markets, particularly Australia’s key export iron ore, further pressured the currency.
Market participants are focused on the RBA minutes for any shift in language regarding inflation, employment, and the timing of potential rate cuts. The central bank held its cash rate at 4.35% in December, and a dovish tone could accelerate selling pressure on the Australian dollar. Conversely, a hawkish stance might provide temporary relief.
China’s upcoming PMI data is also in the spotlight, as Australia’s largest trading partner’s economic health directly influences demand for Australian exports. A weaker-than-expected manufacturing PMI could dampen sentiment, while any signs of fresh stimulus may offer support. Technical levels show critical support near 0.6480–0.6500, with a break below opening the door to 0.6400.
