AUD/USD holds near 0.6600 as Greenback weakens on US shutdown and soft PMI data

• AUD/USD holds modest gains around 0.6600, set for its first weekly gain in three weeks.
• Greenback under Pressure as the US government shutdown drags into a third day, dampening sentiment.
• S&P Global Services PMI shows cooling momentum on both sides of the Pacific.

The Australian Dollar (AUD) holds modest gains versus the US Dollar (USD) on Friday, supported by a weaker Greenback as the United States (US) government shutdown drags on and the ISM Services Purchasing Managers Index (PMI) softens.

At the time of writing, the pair is changing hands near 0.6600, trimming earlier gains, still on track for its first weekly advance in three weeks. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, is hovering near 97.72, just above the weekly low of 97.46.

Earlier in the day, data from the Institute for Supply Management (ISM) showed the Services PMI eased to 50.0 in September from 52.0 in August, missing the consensus forecast of 51.7. The details revealed that the New Orders Index fell to 50.4 from 56.0, while the Employment Index edged down to 47.2 from 46.5.

Separate data from S&P Global also pointed to cooling momentum in the services sector on both sides of the Pacific. In the US, the S&P Global Services PMI eased to 54.2 from 54.5, marking the second consecutive monthly slowdown as softer domestic demand tempered gains in export orders. In Australia, the S&P Global Services PMI slipped to 52.4 in September from 55.8 in August, still signaling expansion but at the slowest pace since June, with softer new business growth partly offset by stronger job creation.

The softer services data reinforced expectations that the Federal Reserve (Fed) will proceed with further monetary policy easing this year, with markets pricing in a near-certain 25 basis-point (bps) interest cut later this month and about an 85% chance of another cut in December, according to the CME FedWatch tool.

By contrast, the Reserve Bank of Australia (RBA) struck a more cautious note at its September meeting, keeping the cash rate steady at 3.60%. Policymakers have signaled that future moves will depend on incoming data, particularly on inflation and wages, suggesting a slower easing path compared with the Fed. Interest-rate swaps now imply about a 36% probability of a 25-bps cut in November, down from around 55% before the central bank's September policy decision, and roughly a 50% chance of easing in December, according to Reuters.