AUD/USD fades bounce off yearly low near 0.6500 as US ADP Employment Change, House voting looms

• AUD/USD struggles to carry the bounce off the lowest levels since early November 2022.
• Cautious markets ahead of US House voting on debt-ceiling extension, key US data prod Aussie bulls.
• Aussie S&P Global Manufacturing PMI improved for May, US ADP Employment Change, PMIs will decorate the calendar.

AUD/USD grinds near intraday high of 0.6510 amid Thursday’s mid-Asian session, after bouncing off the lowest levels in nearly seven months the previous day. In doing so, the quote justifies its risk-barometer status as the US House of Representatives debate the much-awaited debt-ceiling deal. Also causing traders to remain cautious are the key US statistics on the calendar for publication, as well as the latest shift in the Federal Reserve (Fed) bias.

It’s worth noting that the sustained below 50.0 prints of Australia’s S&P Global Manufacturing PMI for May, to 48.4 versus 48.0 expected and prior, also prods the AUD/USD pair’s corrective bounce off the multi-month low. Furthermore, a third consecutive fall in Australian home prices in April also exerts downside pressure on the quote.

Even so, the US Dollar’s latest retreat from the highest levels since mid-March amid a likely pause in the Federal Reserve’s (Fed) rate hike trajectory and mixed data, not to forget the hopes of avoiding the US default, keeps the AUD/USD buyers hopeful.

That said, US JOLTS Job Openings rose to 10.103M in April versus 9.375M expected and 9.745M prior whereas Chicago Purchasing Managers’ Index dropped to 40.4 for May from 48.6 prior and 47.0 market forecasts. Earlier in the week, the US consumer sentiment gauge improved but the details were unimpressive.

Not only the data, but the Fed talks were also mixed but suggested challenges for the hawks of late. On Wednesday, Federal Reserve (Fed) Governor Michelle Bowman cited recovery in the residential real estate market while also adding, “The leveling out of home prices will have implications for the Fed's fight to lower inflation,” per Reuters. Before him, Cleveland Fed President Loretta Mester suggested that the Fed must go for a rate hike in June. Additionally, Fed Governor and vice chair nominee Philip Jefferson said that skipping a rate hike would allow the Fed "to see more data before making decisions about the extent of additional policy firming,” per Reuters. On the same line was Federal Reserve Bank of Philadelphia President Patrick Harker who also said on Wednesday that he is inclined to support a "skip" in interest rate hikes at the central bank's next meeting in June.

While justifying the same, Wall Street Journal’s (WSJ) Nick Timiraos signaled that Federal Open Market Committee (FOMC) is likely to hold interest rates steady in June, which in turn allowed the AUD/USD price to remain firmer.

Elsewhere, Republican leader Mitch McConnell conveyed expectations of the US debt ceiling bill passing and reaching the Senate on Thursday. The policymaker’s comments become the key for the debt-limit extension as Republicans control the House where the bill is currently discussed.

While portraying the mood, Wall Street closed with minor losses and the yields were down while the US Dollar Index (DXY) ended Wednesday’s North American trading on the positive side despite the latest retreat.

Moving on, the US House of Representatives is debating the US debt ceiling extension and will vote on it at around 00:30 GMT, which will be key to watching. Following that, early signals for Friday’s United States Nonfarm Payrolls (NFP) will decorate the calendar and hence will be crucial for the AUD/USD watchers to observe. Among them, the ADP Employment Change, ISM Manufacturing PMI and S&P Global PMIs for May will be crucial to watch.

Technical analysis

AUD/USD bears appear losing momentum strength as a downward-sloping support line from December 2022, close to 0.6490 by the press time, restricts immediate declines of the Aussie pair.