Australian Dollar Slips as US Dollar Strengthens, Focus on Initial Jobless Claims

• Australian Dollar Resilient Despite Drop in Trade Surplus
• China’s Caixin Services PMI Shows Improvement in May
• US Dollar Faces Challenges Following Recent Economic Reports

The Australian Dollar (AUD) maintained its strength in consecutive sessions against the US Dollar (USD) on Thursday. The resilience of AUD/USD comes amidst the latest data releases on Australia’s trade balance and China’s Caixin Services Purchasing Managers’ Index (PMI).

Australia’s trade surplus for April was reported at AUD 5,413 million, which was below the anticipated AUD 6,100 million and the previous month’s revised figure of AUD 6,892 million. Exports decreased by 2.4% month-over-month in April, following a 7.2% increase in the previous month. Conversely, imports rose by 1.1%, compared to a 2.4% decline in March. The Caixin Services PMI in China increased to 51.1 in May, up from 50.7 in April.

The AUD/USD pair also gained traction as the US Dollar weakened in response to unfavorable economic data and growing economic uncertainties in the United States. Market participants are now looking forward to the US trade balance and weekly Initial Jobless Claims data scheduled for release later in the North American session.

Australian Dollar Faces Downward Pressure as US Dollar Recovers

• The US Dollar Index (DXY), which tracks the performance of the dollar against a basket of six major currencies, is currently trading around 98.80, having recouped its earlier losses. The US Dollar is experiencing downward pressure due to dampened risk sentiment fueled by tariff uncertainties and concerns over potential impacts on US economic growth.
• The Institute for Supply Management’s (ISM) Services PMI dropped to 49.9 in May from 51.6 in April, coming in weaker than the expected 52.0. Additionally, US ADP private sector employment saw a modest increase of 37,000 in May, significantly below the anticipated 115,000, following a revised increase of 60,000 in April.
• House Republicans have passed a substantial tax and spending package, dubbed Trump’s “Big Beautiful Bill,” which may significantly increase the US fiscal deficit and keep bond yields high for an extended period. This development has intensified concerns about the US economy, prompting investors to move away from American assets in a trend known as “Sell America.” Senate modifications are expected as GOP lawmakers aim to finalize the package by July 4.
• Following the temporary tariff relief agreed upon in Geneva earlier this month, President Trump accused China of violating the truce. The US Trade Representative also noted China’s failure to eliminate non-tariff barriers as agreed. However, China’s Ministry of Commerce countered these claims, stating that it had adhered to the agreement by cancelling or suspending relevant measures.
• Despite expectations for expansion, China’s Caixin Manufacturing PMI unexpectedly declined to 48.3 in May from 50.4 in April. Conversely, the National Bureau of Statistics (NBS) reported a slight improvement in its Manufacturing PMI for May. These developments could influence the Australian Dollar, given the significant trade relationship between Australia and China.
• The Australian Bureau of Statistics (ABS) reported that the national GDP grew by 0.2% in the first quarter, below the expected 0.4% and the previous quarter’s 0.6%. The annual growth rate also fell short of expectations, remaining steady at 1.3% against a forecasted 1.5%.
• The S&P Global Australia Composite PMI indicated a marginal expansion in business activity in May, marking the slowest growth rate so far in 2025.
• Similarly, the S&P Global Australia Services PMI continued to expand in May, albeit at the slowest pace in six months. The Ai Group Manufacturing PMI also showed signs of improvement, although manufacturers are facing delays in major projects and increased market uncertainty.
• Minutes from the Reserve Bank of Australia’s (RBA) latest monetary policy meeting revealed a preference for a cautious approach, with a 25 basis point cut considered more appropriate. The board noted significant risks from US trade policy to the global economic outlook, although these have not yet impacted the Australian economy.
• RBA Assistant Governor Sarah Hunter expressed concerns that higher US tariffs could hinder the global economy, potentially affecting investment, output, and employment in Australia. Nonetheless, she noted that Australian exporters are relatively well-positioned to manage these challenges, assuming continued support from Chinese fiscal policies.

Australian Dollar Nears 0.6500, Approaching Seven-Month High

The AUD/USD pair is trading near 0.6500, maintaining a bullish stance. Technical analysis on the daily chart shows the pair within an ascending channel pattern, with current momentum supported by its position above the nine-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) is above 50, indicating a positive market sentiment.

On the upside, the AUD/USD pair could aim for the seven-month high of 0.6537 recorded on May 26. Further advances might target the upper boundary of the ascending channel near 0.6670.

Key support is found at the nine-day EMA of 0.6468, coinciding with the ascending channel’s lower boundary at 0.6460. A breach below this critical support zone could reverse the bullish trend, potentially leading the AUD/USD pair to test the 50-day EMA at 0.6400.

AUD/USD: Daily Chart