AUD/USD bulls struggle around 0.6950 on mixed concerns, Aussie trade numbers eyed
After bouncing off the weekly low, AUD/USD seesaws around mid-0.6900s, as traders await fresh clues during the initial Asian session on Thursday.
The Aussie pair’s earlier rebound could be linked to the firmer equities and softer US dollar while the latest inaction seems to portray the anxiety ahead of the key trade numbers from Australia and the US, not to forget traders’ confusion amid mixed signals.
Wall Street managed to post notable gains on solid earnings and the US dollar’s failure to remain firmer, mainly due to receding economic fears emanating from China. The reason could be linked to the strong China Caixin Manufacturing PMI.
However, downbeat Aussie data and the firmer US data challenged the AUD/USD bulls afterward. That said, Australia’s July AIG Performance of Construction Index fell to 45.3 from 46.2 whereas S&P Global Services PMI improved to 50.9 versus 50.4 prior. On the other hand, US ISM Services PMI for July rose to 56.7 from 55.3 prior and the market expectation of 53.5. On the other hand, the Final reading of the US S&P Global Services PMI for July dropped to 47.3, marking the first contraction in two years, from 52.7 in June and the flash estimate of 47.
Elsewhere, St. Louis Federal Reserve Bank President James Bullard said, “(There is) still some ways to go to get to a restrictive monetary policy." The policymaker adds that he still wants to get to 3.75 to 4% this year while showing a preference for the type of frontloading.
On a different page, the US-China tussles over Taiwan escalated and tamed the risk-on mood. On the same line was a cautious mood ahead of today’s trade numbers and Friday’s US employment data.
Amid these plays, the equities were firmer and the Treasury yields dropped, which drowned the US dollar.
Moving on, Australia’s Trade Balance for June, expected 14,000M versus 15,965M prior, will be the immediate catalyst for the AUD/USD traders ahead of the US Good and Services Trade Balance for the said month, expected $-80.1B versus $-85.5B prior. Also important will be the updates on the Sino-American tension surrounding Taiwan and global economic slowdown chatters, not to forget pre-NFP mood.
Despite bouncing off the 21-DMA support surrounding 0.6890, AUD/USD bears remain hopeful until witnessing a clear upside break of the support-turned-resistance line from July 14, around 0.7000 by the press time.
Reference by: Investing.com