Aussie Dollar Daily Outlook: Will ISM PMI Shift the Rate Narrative? – ForexNews.PRO

Across the Pacific, Australia’s economic calendar also draws attention. The AUD/USD is in the spotlight on Monday, May 5, with labor market and inflation data in focus. Economists forecast ANZ-Indeed Job Ads to rise 0.3% in April month-on-month (MoM), following a 0.4% increase in March.

Stronger job ads may signal robust labor demand, potentially boosting wages. Higher wages may fuel consumer spending and demand-driven inflation. While inflation figures for Q1 2025 supported a May RBA rate cut, tight labor market conditions could temper expectations for multiple RBA rate cuts. In this scenario, the Aussie dollar may trend higher. Conversely, a lower jobs ad reading could signal a more dovish RBA stance, weighing on the Aussie.

Economists forecast the TD-MI Inflation Gauge to increase 0.4% MoM in April, easing from a 0.7% rise in March. A softer inflation print could reinforce multiple RBA rate cut bets, impacting Aussie dollar demand. However, a hotter reading would signal rising inflation risks, supporting a more hawkish RBA rate path and Aussie dollar appetite.

In the US session, an ISM Services PMI drop below the 50 neutral level could raise bets on multiple Fed rate cuts. A more dovish Fed stance would narrow the US-Aussie interest rate differential in favor of the Aussie. In this scenario, the AUD/USD pair could target the crucial $0.65 mark. Conversely, a surprise increase in the PMI may temper Fed rate cut bets, widening the rate differential. This could lead to a drop below the 200-day EMA and a test of the $0.63623 support level.

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