Japanese Yen and Aussie Dollar News: Wage Growth, Services PMI, and Tariffs in Focus

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The AUD/USD: Services PMIs and Tariffs Crucial for Aussie Dollar Demand

For the Australian dollar, the S&P Global Australian Services PMI spotlit the AUD/USD early in the February 5 session. Accounting for over 70% of Australia’s GDP, January’s PMI data could bolster the case for a February RBA rate cut.

The PMI rose from 50.8 in December to 51.2 in January, up from a preliminary 50.4.

Beyond the headline PMI, employment and price trends tested expectations of a more dovish RBA rate path. Firms cut increased staffing levels, with input price inflation accelerating, dampening bets on multiple H1 2025 RBA rate cuts.

Jingyi Pan, Economist Associate Director at S&P Global Market Intelligence, previously commented on price trends:

“Not only have rising prices dampened sales thus far according to anecdotal evidence, the potential to keep interest rates elevated for longer also poses a threat to the outlook for growth in 2025.”

For a comprehensive analysis of AUD/USD trends and trade data insights, visit our detailed reports here.

Australian Dollar Daily Chart

Turning to the US session, stronger services sector activity, labor market, and higher prices could impact the US-Aussie interest rate differential. Falling Fed rate cut bets would widen the gap in favor of the US dollar. A more hawkish Fed policy stance could drag the AUD/USD pair below $0.61500 toward the upper band of the descending channel.

Conversely, softer employment and price trends could narrow the interest rate differential, favoring the Aussie dollar. The AUD/USD could move toward $0.63 and the 50-day EMA on a more dovish Fed rate path.

Additionally, US-China tariff developments remain a risk factor. The Aussie dollar may face selling pressure if the US and China fail to reach a trade agreement.