- AUD / USD is witnessing some selling on Thursday amid a good recovery in USD demand.
- Mixed Australian data and China’s softer services PMI also contribute to the pair’s selling bias.
- Investors await the US macroeconomic releases to find some significant business opportunities.
The pair AUD/USD has extended its intraday decline and reached new daily lows around the region of 0.7720-15 at the start of the European session on Thursday, where it seems to have found some support. At time of writing, the pair is recovering slightly to the 0.7730 region, still negative on the day.
Following good price movements in both directions the day before, the pair encountered fresh selling on Thursday, pressured by a combination of factors. Mixed macroeconomic data from Australia, coupled with a softer Chinese services PMI, has acted as a headwind for the Australian dollar.. Apart from this, a good recovery in the demand for the US dollar has been considered another factor that has put some downward pressure on the AUD / USD pair.
According to data released earlier this Thursday, Australian retail sales grew 1.1% in April, while the trade balance registered a surplus of 8,028 million Australian dollars. However, the fact that the surplus was mainly due to a drop in imports failed to impress the pair’s bulls. On the other hand, a private Caixin survey indicated slower growth in China’s service sector in May.
On the other hand, the US dollar has found some support from signs of stability in bond yields from the US Treasury. Apart of this, the prevailing sentiment of caution in the stock markets it has further benefited the safe-haven US dollar and pushed away monetary flows from the higher perceived risk of the Australian dollar. That said, pessimistic expectations from the Fed could prevent USD bulls from opening aggressive positions.
Various FOMC officials have downplayed concerns about inflation and they have reiterated that any increase in prices would turn out to be temporary. Investors now appear to be aligned with the Fed’s stubbornly pessimistic view and have been lowering their expectations for a Fed tightening earlier than anticipated. This, in turn, warrants some caution before positioning for a sharp decline in the AUD / USD pair.
Market participants are now waiting for the important macroeconomic data from the US for a new momentum. Highlights on the US economic calendar are the release of the ADP report on private sector employment, initial weekly jobless claims, and the ISM services PMI. Investors could follow the signs of the broader market risk sentiment to seize some short-term opportunities around the AUD / USD pair.
AUD / USD technical levels
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