The Australian dollar edged higher on Monday, supported by data showing the country’s services sector expanded for a fifteenth consecutive month. The upbeat figures helped reinforce confidence in the domestic economy, pushing the aussie higher against a basket of major currencies.
Australia’s Services Purchasing Managers’ Index (PMI) came in above the 50-mark threshold that separates growth from contraction, highlighting continued strength in consumer-facing industries. The prolonged expansion streak suggested that underlying demand remains resilient, even as global uncertainty lingers.
AUD/USD 1-D Chart as of May 5th, 2025 (Source: TradingView)
The data boosted expectations that the Reserve Bank of Australia may hold interest rates steady in the near term, with some analysts noting that persistent growth in services could complicate any case for early rate cuts. “The strength in services shows the economy still has momentum,” said one market strategist. “That’s supportive of the AUD in the current rate environment.”
The aussie’s gains also came despite a broadly steady US dollar, which held firm ahead of upcoming US labor market data. This divergence suggests that local economic conditions are increasingly influencing the AUD’s direction, rather than broader moves in the greenback.
Still, the currency’s advance was modest, reflecting some caution among investors amid geopolitical tensions and lingering questions around China’s growth outlook—an important factor for Australia’s export-heavy economy.
Looking ahead, traders will closely watch additional domestic indicators, including retail sales and inflation updates, for confirmation that economic momentum can be sustained. For now, the Australian dollar appears well-supported, with solid services growth helping anchor sentiment.
