The Australian Dollar rose to three-month highs as US Treasury bond buybacks weighed on the US Dollar, overshadowing mixed PMI data.
The Australian Dollar surged above 0.7150 against the US Dollar on Friday, reaching its highest level since early June. The rally was driven by broad US Dollar weakness following the US Treasury’s announcement to double bond buybacks starting in September.
Australia’s preliminary July PMI data showed steady manufacturing growth at 52.0, while services activity slowed to 52.9 from 53.6 in June. The Composite PMI dipped to 52.5 from 53.2. Despite the mixed figures, the AUD’s gains were primarily fueled by US fiscal policy expectations.
Analysts at MUFG cautioned that markets remain skeptical of US Treasury Secretary Scott Bessent’s pledges on fiscal consolidation, suggesting limited long-term support for the US Dollar. US preliminary PMI data also contributed to the currency’s decline.