AUD Struggles as Chinese Data Fails to Boost Dollar

The Australian Dollar (AUD) struggled to gain traction despite a series of economic releases from Australia and China, its largest trading partner. AUD/USD remained on the defensive during Asian trading on Wednesday, hovering near 0.6970 as the pair posted a third consecutive daily loss.

In Australia, headline price growth picked up while underlying inflation showed signs of cooling. The Consumer Price Index (CPI) increased to 4.0% year-over-year in August, matching expectations and accelerating from 3.5% in July. However, the closely watched trimmed mean measure came in slightly softer than anticipated.

Meanwhile, China's September PMIs signaled an improvement in business conditions. The Manufacturing Purchasing Managers Index (PMI) returned to expansion territory at 50.1, while the Non-Manufacturing PMI rose to 50.2. Private-sector data painted an even stronger picture of Chinese economic momentum, with the RatingDog Manufacturing PMI advancing to 52.1 and Services PMI ticking up to 51.6.

The stronger manufacturing and services PMIs did not translate into substantial support for AUD, leaving AUD/USD confined near its recent lows. The US rates complex continued to move higher due to anticipation of additional monetary tightening from the Federal Reserve.