AUD/USD consolidates weekly gains near 0.6940 in choppy day
|- AUD/USD looks to end second straight week in positive territory.
- Market action remains subdued due to Independence Day holiday in US.
- Reserve Bank of Australia (RBA) will announce policy rate decision next Tuesday.
The upbeat macroeconomic data releases from Australia and China this week helped the AUD gather strength against its rivals. After starting the week near 0.6860 and staying calm on Monday, the AUD/USD pair closed the previous three days in the positive territory and remains on track to extend its winning streak to four days. As of writing, the pair was up 0.3% on a daily basis at 0.6942.
Earlier in the week, the Commonwealth Bank's Manufacturing and Services PMI figures both came in above the 50 threshold for June to show that the business activity continued to expand in those sectors. "The lifting of restrictions on business operations provided relief to the service sector as firms reopened and individuals resumed consumption," the Commonwealth Bank noted in its press release.
Moreover, Caixin Manufacturing PMI in China improved to 51.2 in June and Caixin Services PMI jumped to 58.4 from 55 in May, providing an additional boost to China-proxy AUD.
On the other hand, concerns surrounding the surging number of new COVID-19 infections in the US helped the greenback stay resilient against its rivals and capped the pair's gains. Despite the upbeat PMI and labour market data from the US, the US Dollar Index pulled away from its weekly lows and now looks to end the week with small losses near 97.20.
US: Nonfarm Payrolls (NFP) surges by 4.8 million in June, Unemployment Rate falls to 11.1%
Focus shifts to RBA meeting
Next week, on Tuesday, the Reserve Bank of Australia (RBA) will announce its policy decision and release the monetary policy statement.
Previewing this event, "since the May meeting, the central bank has sharply slowed the pace of its bond-buying, as fixed income markets began to stabilize, only purchasing government bonds on one occasion," noted Wells Fargo analysts. "At its meeting next week, we look for the RBA to maintain a steady policy and expect the current cash target rate of 0.25% to remain at its current level for the foreseeable future.”
Technical levels to watch for
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