The Australian dollar has struggled so far this year, as receding bets in favour of Fed rate cuts hammer risk assets, while economic data suggests that the Australian economy contracted at the end of 2023. Last week’s preliminary PMI data for December was a disappointment.
The composite index edged upwards in the final month of the year, although fell short of expectations and continued to print well below the level of 50 for the third straight month (46.9).
Quarterly GDP data won’t be released until early-March, although it would be reasonable to assume that a QoQ contraction in activity is a distinct possibility. Investor expectations regarding the state of the Australian economy will be key in determining the extent of any continued rebound in AUD in the coming weeks.
This week will be a relatively busy one in that regard, with housing, retail sales and trade data to be released on Tuesday and Thursday. Arguably the most important data point will, however, be Wednesday’s monthly inflation print for November. Any downside surprise here could further weigh on AUD this week
