The Australian dollar remained under pressure on Thursday, with AUD/USD hovering below the critical 0.6300 level despite China’s official Manufacturing PMI surging to a 12-month high of 52.4 in April. Markets largely dismissed the bullish data as investors focused on broader risk aversion and U.S. dollar strength.
Dollar Dominance Trumps Regional Growth Signals
While China’s factory activity expansion—its fastest since April 2023—typically supports the export-linked AUD, the currency struggled amid resurgent demand for safe-haven assets. The U.S. dollar index (DXY) climbed 0.3% as Federal Reserve rate cut expectations dimmed following stronger-than-expected Q1 U.S. inflation data. “The AUD is caught between improving Chinese fundamentals and relentless USD momentum,” said Westpac strategist Sean Callow. “Until the Fed signals clearer dovishness, rallies will remain capped.”
Technical Trap: Key Resistance at 0.6300 Holds Firm
AUD/USD briefly tested 0.6285 early in the session before retreating to 0.6250, reflecting persistent selling pressure. Chart analysts note the pair has failed to close above its 50-day moving average (0.6298) for 17 consecutive sessions. “The 0.6300 zone now acts as a supply wall,” said IG Markets analyst Tony Sycamore. “A sustained break above could target 0.6380, but momentum indicators suggest bears retain control.”
RBA Policy Uncertainty Adds Downward Pressure
Domestic headwinds further weighed on the Aussie, with markets pricing only a 12% chance of a Reserve Bank of Australia rate hike in May. Mixed Q1 inflation data—CPI at 3.6%, slightly below forecasts—reinforced expectations of prolonged policy stagnation. Analysts warn that without tighter monetary policy, the AUD’s yield appeal will keep diminishing against the greenback.
Broader Risk Mood Dictates Near-Term Trajectory
Traders now await Friday’s U.S. nonfarm payrolls report, which could extend USD gains if job growth exceeds projections. Meanwhile, iron ore prices’ 3.2% weekly drop—amid sluggish Chinese steel demand—adds fundamental pressure. The AUD’s fate appears tied to global macro forces rather than regional data surprises, with bears eyeing a retest of 2024 lows near 0.6170.
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