AUD/USD has posted slight losses on Wednesday, as the pair continues to trade quietly this week. Currently, the pair is at 0.7041, down 0.13% on the day. On the release front, Australian AIG manufacturing index improved to 54.8, pointing to expansion in the manufacturing sector. Commodity prices continued to accelerate, with a gain of 14.4%. In the U.S., ADP nonfarm payrolls soared to 275 thousand, crushing the estimate of 181 thousand. Will the official nonfarm payrolls follow suit on Friday? On the manufacturing front, ISM Manufacturing PMI slowed to 52.8, shy of the estimate of 55.0 points. Later, the FOMC will set the monthly benchmark rate and release a rate statement. On Thursday, the U.S. posts unemployment claims and Australia releases building approvals.
The U.S-China trade war has weighed heavily on the Australian economy, as China is Australia’s number one trading partner. China is gripped by a slowdown, and April manufacturing data was soft. Manufacturing PMI slowed to 50.1, missing the forecast of 50.7 points. The unofficial Caixin Manufacturing PMI followed the same trend, falling to 50.2. This missed the estimate of 51.0. Both indicators point to stagnation in the manufacturing sector, with readings barely in expansion territory. With the markets braced for a sharp drop of 12.5% in building approvals on Thursday, the Aussie could hit some headwinds this week.
