The Australian dollar jumped to a six-month high and commodities rallied after a string of softer-than-expected economic data in the US indicated that the Federal Reserve will be ready to cut interest rates in September.

The dramatic moves across global markets were fuelled by evidence that the US services sector contracted in June at the fastest pace since the height of the pandemic in 2020 – far worse than economists had expected. That coincided with data pointing to a slowdown in private sector employment growth and an increase in initial jobless claims.