Australian Dollar Slips as US Dollar Strengthens Before ISM Services PMI

Australian Dollar Falls as GDP Misses, US Dollar Regains Momentum

AUD/USD Retreats from Highs as Australian Data Disappoints

The Australian Dollar (AUD) slipped against the US Dollar (USD) in Wednesday’s session after a short-lived intraday rally. The AUD/USD pair trades lower, pressured by underwhelming Australian economic data and a resurgent US Dollar ahead of key US macro releases.

Australia’s Q1 GDP Falls Short of Forecasts

The Australian Bureau of Statistics (ABS) reported that Q1 GDP grew 0.2% quarter-over-quarter, significantly below Q4’s 0.6% increase and short of the 0.4% market estimate. Yearly growth came in at 1.3%, also underperforming the 1.5% forecast.

This slowdown raises questions over the Reserve Bank of Australia's (RBA) future policy direction as domestic demand remains subdued.

Explore more: Full Breakdown of Australia's Q1 GDP

Australia’s PMI Points to Slower Business Activity

Adding to the economic concerns, S&P Global’s Australia Composite PMI fell to 50.5 in May from 51.0 in April. Though still in expansionary territory, it marks the slowest pace of growth in 2025, hinting at softening momentum in the private sector.

US Dollar Strengthens Ahead of ISM Services PMI

Meanwhile, the US Dollar has regained strength, recovering from recent weakness tied to tariff-driven uncertainty. With the ISM Services PMI for May due later Wednesday, traders are positioning around expectations for resilience in US services.

Read next: Why the ISM Services PMI Matters for the Dollar

Suggested Internal Links for Tredu.com:

• AUD/USD Daily Forecast and Analysis
• Australia Economic Calendar – Key Events
• Forex Markets: USD Trends and Key Data