AUD/USD retreats from highs after strong ADP report, ISM PMI next


   •  ADP report beats consensus estimates. 
   •  US bond yields spike after employment data.
   •  ISM PMI next, focus remains on FOMC. 

The AUD/USD pair trimmed some of its early strong gains and retreated around 20-pips from session tops to currently trade around the 0.7670-65 band. 

The US Dollar gained some additional traction in the last hour after the ADP report showed private-sector employers added more-than-expected jobs during the month of October and reaffirmed the underlying strength in the US labor market. 

   •  US: Private sector employment increased by 235,000 jobs from Sep to Oct - ADP

Today's upbeat reading might have also fueled speculations for a firmer reading from Friday's official jobs report (NFP) and supported market expectations for December Fed rate hike expectations. The same is evident from a sharp spike in the US Treasury bond yields, which was eventually seen driving flows away from higher-yielding currencies - like the Aussie. 

Barring the initial reaction, the pair lacked any strong follow-through momentum and continued holding with some minor daily gains as the commodity-linked Australian Dollar was being supported by buoyant sentiment around commodity space, especially copper and oil. 

Next on tap would be the release of ISM manufacturing PMI, but again is likely to be overshadowed by pre-Fed repositioning trade.

Technical levels to watch

Immediate support remains near mid-0.7600s, which if broken decisively is likely to accelerate the pair's fall even below last Friday's multi-month lows support near 0.7625 level, and the 0.7600 handle, towards its next major support near the 0.7575-70 region.

On the upside, any up-move beyond 0.7680 level might continue to confront fresh supply at the very important 200-day SMA, currently near the 0.7700 handle, above which a bout of short-covering could lift the pair back towards 0.7750 resistance area.
 

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