Core Viewpoint - The Australian dollar (AUD) has experienced a slight decline against the US dollar (USD) after five consecutive days of increase, primarily due to persistent inflation pressures in the US, which have heightened uncertainty regarding potential interest rate cuts by the Federal Reserve [1][5]. Group 1: Technical Analysis - The AUD/USD is currently trading within the range of 0.6400 to 0.6600, with resistance levels at 0.6568 (August 14) and 0.6625 (July 24) [3]. - A breakout above this range could lead to a target of 0.6687 (November 7, 2024 high), while the psychological level of 0.7000 remains a distant target [3]. - Support is found at 0.6414 (August 21), and a drop below this level could see the pair fall to the 200-day moving average at 0.6385, slightly above the June low of 0.6372 [3]. Group 2: Fundamental Overview - The AUD/USD has retraced some recent gains, falling to the 0.6480 area, marking a multi-day low near its 100-day moving average [5]. - Australia's inflation remains high, with the Consumer Price Index (CPI) rising from 1.9% in June to 2.8% in July, contributing to ongoing inflation concerns and a cautious stance from the Reserve Bank of Australia (RBA) [7]. - Economic indicators show resilience, with the manufacturing PMI at 53.0 and retail sales increasing by 1.2% in June, alongside a trade surplus of AUD 5.365 billion [8]. Group 3: Central Bank Policies - The RBA recently cut interest rates by 25 basis points to 3.60% and lowered growth forecasts for 2025, indicating that future policy decisions will be data-dependent [10]. - Market expectations suggest another 25 basis point cut by November 5, with the potential for accelerated easing if the labor market weakens [10]. Group 4: Market Sentiment - Speculators have significantly increased short positions on the AUD, with net speculative short positions rising to approximately 100,600 contracts as of August 26, the highest level since April 2024 [13].

Core Insights - The S&P Global Australia Composite PMI decreased from 51 to 50.5 in May 2025, indicating a slight reduction in the growth of the private sector's overall output in Australia, marking the eighth consecutive month of increase [1][2] Economic Performance - In May, the private sector in Australia experienced the lowest output growth of the year, with only the services sector showing positive growth while manufacturing output declined [2] - Despite a rebound in export orders, the overall growth of new business in the private sector slowed down in May [2] - Employment growth in private enterprises also weakened due to reduced operational pressures, and business confidence remained at a low point, matching the lowest level in five months [2] Services Sector Analysis - The services sector business activity index fell from 51 in April to 50.6 in May, continuing to remain above the neutral level of 50 for the 16th consecutive month, indicating ongoing expansion [2] - The growth of business activity in the services sector slowed to a weak level due to a slowdown in new business growth and a decrease in export orders [2] - Despite the slowdown, service sector firms continued to increase employment to manage backlogs, although business confidence slightly weakened in May [2] Price and Cost Dynamics - There was a notable easing of price pressures faced by the services sector in May, with the increase in average input costs slowing down, leading to the lowest sales price increase in nearly four and a half years [2][3] - The inflationary pressures faced by the services sector have eased, which may provide favorable conditions for the Reserve Bank of Australia to consider further interest rate cuts to support economic growth [3] - The significant decline in sales price increases in the services sector, along with easing price pressures in manufacturing, suggests a potential softening of future CPI trends in Australia [3]