The Australian dollar traded just above 0.7050, up by just under 0.2%, marking a seven-week high and the first sustained move since mid-June above the 50-day exponential moving average near 0.7000. The 200-day EMA around 0.6900 continued to rise, while the day’s range was 25 pips and the daily Stochastic RSI eased from the high 80s to the mid 70s. Earlier rate repricing has altered the backdrop: three increases in February, March and May lifted the cash rate from 3.60% to 4.35%, but late-July inflation of 3.8% headline and 3.6% trimmed mean pushed expectations towards a hold at the 04:30 GMT decision on 11 August, followed by the Statement on Monetary Policy and a press conference.
Domestic Economic Activity and Policy Outlook
Domestic activity firmer than earlier in the year has not translated into a stronger rates narrative. The July composite PMI was revised to 53.2, its best since January, alongside a six-month high in services and manufacturing back in expansion, as local equities hit a record.
International Influences and Policy Differentials
Offshore signals were mixed: China’s July services gauge printed 50.4 versus 53.7 consensus and 54.1 prior, while manufacturing eased to 50.9 from 51.7; Australia’s June trade balance was forecast near a 1.1 billion Australian dollar deficit after roughly 3 billion previously, with exports last reported 6.9% lower on the month. China’s trade figures were expected at 22.7% YoY exports from 27% and 28.6% imports from 36%, while US data showed 44K private payrolls versus 70K, a services employment index of 47.4, and an 80K consensus for payrolls after 57K. Policy differentials also shifted, with 4.35% against a US upper bound of 3.75%, even as the currency remained more than two cents below its May peak.
