AUD/USD flirts with multi-day peak, around mid-0.6400s amid modest USD downtick

AUD/USD gains some follow-through positive traction and draws support from a softer USD.
The intraday uptick seems rather unaffected by rather unimpressive Australian PMIs for August.
China's economic woes and hawkish Fed expectations might cap any further gains for the pair.

Haresh Menghani FXStreet

The AUD/USD pair attracts some dip-buying following the overnight pullback from a multi-day peak and sticks to its gains through the Asian session on Wednesday. Spot prices currently trade around mid-0.6400s, up just over 0.40% for the day, and look to build on the recent recovery from the lowest level since November 2022 touched last Thursday amid a mildly softer tone surrounding the US Dollar (USD).

In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, erodes a part of the previous day's gains to a more than two-month high and is pressured by retreating US Treasury bond yields. Apart from this, a generally positive tone around the US equity futures prompts some profit-taking around the safe-haven buck and benefits the risk-sensitive Australian Dollar (AUD). Against the backdrop of hopes for more stimulus from China, signs of easing US-China trade tensions lead to a slight improvement in the global risk sentiment.

It is worth recalling that the US Commerce Department's Bureau of Industry and Security (BIS) announced on Monday that it will remove 27 Chinese entities from its Unverified List. China welcomed the move and said that it is conducive to normal trade between the two nations. This comes ahead of US Secretary of Commerce Gina Raimondo's visit to China on August 27-30, for meetings with senior Chinese officials and US business leaders. That said, concerns over a Chinese economic slowdown keep a lid on the optimism and the China-proxy Aussie.

A smaller rate cut by the People’s Bank of China (PBoC) signalled limited policy support for the economy, despite a deepening crisis in the domestic property sector, and did little to ease worries about the worsening economic conditions. This, along with weaker Australian PMI prints, might hold back traders from placing aggressive bullish bets around the AUD/USD pair. The latest survey from Judo Bank revealed that the manufacturing sector in Australia continued to contract in August and services activity shrank at the fastest pace in 19 months.

Furthermore, growing acceptance that the Federal Reserve (Fed) will stick to its hawkish stance and keep interest rates higher for longer favours the USD bulls, which might further contribute to capping the AUD/USD pair. Market participants now look to the release of the flash US PMIs for a fresh impetus later during the early North American session. The focus, however, will remain on the Jackson Hole Symposium, where comments by Fed Chair Jerome Powell might provide cues about the future rate hike path and drive the USD demand in the near term.

Technical levels to watch

AUD/USD

Overview
Today last price	0.6447
Today Daily Change	0.0024
Today Daily Change %	0.37
Today daily open	0.6423

Trends
Daily SMA20	0.6539
Daily SMA50	0.6662
Daily SMA100	0.6662
Daily SMA200	0.6731

Levels
Previous Daily High	0.6458
Previous Daily Low	0.6404
Previous Weekly High	0.6522
Previous Weekly Low	0.6364
Previous Monthly High	0.6895
Previous Monthly Low	0.6599
Daily Fibonacci 38.2%	0.6437
Daily Fibonacci 61.8%	0.6424
Daily Pivot Point S1	0.6398
Daily Pivot Point S2	0.6374
Daily Pivot Point S3	0.6344
Daily Pivot Point R1	0.6453
Daily Pivot Point R2	0.6482
Daily Pivot Point R3	0.6507

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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