AUD/USD: Bulls shrug-off China Caixin Services PMI to attack 0.7200
|- AUD/USD stays positive near the weekly top while extending the previous day’s run-up.
- China Caixin Services PMI slipped to 54.3 versus 56.8 forecast, 58.4 prior in July, Aussie data came in mixed during early-Asia.
- Virus woes, deadlock over US stimulus and Sino-American tension portray the risk-tone sentiment.
- US data, virus updates and news relating to American aid package will be the key.
AUD/USD stays bid near 0.7180, up 0.28% on a day, during the early Wednesday. In doing so, the aussie pair pays a little heed to China’s Caixin Services PMI and risk-off mood.
China’s Caixin Services PMI came in below expectations to 54.1 in July versus 56.8 market consensus and 58.4 previous readouts. The data fails to follow the headlines activity numbers from the dragon nation published recently.
Read: China’s Caixin/Markit services PMI: 54.1 vs 56.8 expected
Earlier during the day, Australia’s AiG Performance of Construction Index grew past-35.5 previous readings to 42.7 whereas Commonwealth Bank Services PMI eased from 58.5 forecasts and prior to 58.2 in July. Further, Australian Home Loans for June reversed -7.6% earlier mark with +7.1% whereas Investment Lending for Homes also rose 8.1% from -15.6% prior.
Not only the mixed data but risk catalysts also failed to stop the Aussie bulls. Market’s risk sentiment sours amid the US policymakers’ failure to deliver the much-anticipated stimulus. Traders are worries as the deadlock over the key decisions near August break in Congress. Further to challenge the risks are the headlines suggesting fresh US-China raw over TikTok, the South China Sea and consulate closures. Additionally, traders also take distant clues from the blast in Lebanon to portray the risk reset.
It’s worth mentioning that the market players ruled out the Herald Sun’s forecast of over 700 new cases of the coronavirus (COVID-19) in Victoria. This could disturb the latest consolidation in new cases after strict lockdown restrictions.
To print the market mood, S&P 500 Futures drop from the multi-week high to 3,295, down 0.15%, whereas stocks in Asia-Pacific also mark losses by the press time.
The reason for the AUD/USD price run-up could be traced from the US dollar’s weakness. The US dollar index (DXY) drops to 93.16, down 0.08% on a day, as we write.
Moving on, traders will keep eyes on the US ADP Employment Change and ISM Non-Manufacturing PMI to better gauge Friday’s jobs report. Though, major attention will be given to the risk catalysts whereas news concerning the US stimulus and pandemic becomes the key.
Technical analysis
An ascending trend line from June 30 joins 21-day EMA to limit the pair’s short-term downside around 0.7095/85. As a result, bulls keep targeting to refresh the multi-month high flashed in June, around 0.7225, while looking at 0.7200 as an immediate hurdle to cross.
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