AUD/USD recovers early lost ground, climbs back closer to mid-0.7700s
- Suspension of Chinese-Australian economic dialogue prompted some selling around AUD/USD.
- A modest USD weakness assisted the pair to attract some dip-buying near the 0.7700 mark.
- The risk-on mood also underpinned the perceived riskier aussie and remained supportive.
The AUD/USD pair managed to recover its intraday losses and moved to the top end of its daily trading range, closer to mid-0.7700s heading into the European session.
The pair witnessed some heavy selling during the early part of the trading action on Thursday after China indefinitely suspended all activity under a China-Australia Strategic Economic Dialogue. China being Australia's major trading partner, the announcement pointed to strained relations between the two countries and exerted some downward pressure on the aussie.
Despite the negative trigger, the AUD/USD pair attracted some dip-buying near the 0.7700 round-figure mark. Bulls might now be looking to build on this week's rebound from the 0.7675 region, or the lowest level since April 14 touched on Tuesday. The intraday uptick was sponsored by a modest US dollar weakness and a generally positive tone around the equity markets.
The USD extended the previous day's modest pullback from two-week tops, triggered by unimpressive US economic data. The ADP report showed that the US private-sector employers added 742K jobs in April and the US ISM Services PMI dropped to 62.7 in April, both falling short of market expectations. This along with weaker US Treasury bond yields undermined the greenback.
Apart from this, the underlying bullish sentiment in the financial markets acted as a tailwind for the perceived riskier aussie and remained supportive of the uptick. The upside, however, is likely to remain capped, at least for the time being, as investors might prefer to wait on the sidelines ahead of the closely-watched US monthly jobs report, scheduled for release on Friday.
In the meantime, traders might take cues from Thursday's release of the usual Initial Weekly Jobless Claims data from the US, due later during the early North American session. Apart from this, the US bond yields and the broader market risk sentiment, will influence the USD price dynamics and produce some trading opportunities around the AUD/USD pair.
Technical levels to watch
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
