AUD/USD is trading lower near 0.6640 on Monday, as the US Dollar strengthens. This is due to the positive US Composite PMI data for June, which showed a 26-month high in business activity and employment rebound. The Greenback was further supported by the stronger-than-expected PMI numbers, creating headwinds for the AUD/USD pair.
Federal Reserve officials have indicated a data-dependent approach and are not in a rush to cut rates until they are confident that inflation will reach their 2% target. Currently, investors are pricing in a 64% chance of a Fed rate cut in September.
On the Australian front, the Judo Bank PMI for June was softer than expected, signaling weakness in the Australian economy and putting pressure on the Aussie. However, the Reserve Bank of Australia (RBA) has a hawkish stance, which is expected to support the Australian Dollar and limit downside for AUD/USD in the near future. RBA Governor Michele Bullock mentioned the possibility of rate hikes during a recent press conference, ruling out rate cuts for now.