AUD/USD extends recovery to mid-0.67s as USD stays under pressure
- Disappointing data from the United States (US) weigh on the USD.
- US Dollar Index slumps below the 99 handle on Thursday.
- Coming up: August retail sales data from Australia.
The AUD/USD pair gathered bullish momentum during the American trading hours on Thursday and continued to erase the losses it suffered earlier in the week after the Reserve Bank of Australia announced 25 basis points rate cut and adopted a dovish tone. As of writing, the pair was up 0.62% on the day at 0.6745.
Weak data continue to hurt the USD
The pair's decisive rebound seems to be fueled by the intense selling pressure surrounding the Greenback.
Today's data from the United States (US) revealed that the economic activity in the service sector expanded at a much slower pace than expected with the Institue for Supply Management's (ISM) Non-Manufacturing Purchasing Managers' Index (PMI) dropping to 52.6 from 56.4.
Assessing this week's disappointing PMI figures, "Both key ISM surveys are pointing to a major slowdown in US growth rates," said ING analysts.
"We are forecasting US GDP growth of 1.3% for 2020 versus a consensus estimate of 1.8% with the clear implication that the Federal Reserve has more work to do to support the economy."
Ahead of Friday's critical labour market data, the US Dollar Index fell to 98.70 area in the last hour to reflect the broad-based USD weakness.
During the Asian trading hours, retail sales data from Australia, which is expected to rebound to +0.5% in August from -0.1% in July, will be looked upon for fresh impetus.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
