AUD/USD stick to modest gains above 0.6600, upsides remains capped ahead of key US data

AUD/USD gains positive traction for the second straight day, though lacks follow-through.
Economic woes continue to act as a headwind for the risk-sensitive Aussie amid a bullish USD.
Investors now look forward to the US Core PCE Price Index for some meaningful impetus.

Haresh Menghani FXStreet

The AUD/USD pair attracts some intraday buying near the 0.6600 round-figure mark, albeit struggles to capitalize on the move and retreats a few pips from the daily peak. Spot prices currently trade around the 0.6620-0.6625 region, up less than 0.15% for the day, and remain well within the striking distance of a nearly four-week low touched on Thursday.

Investors remain worried about economic headwinds stemming from rapidly rising borrowing costs and the fears were further fueled by rather unimpressive Chinese macro data. In fact, the official Chinese Manufacturing PMI improved slightly to 49 for June, from 48.8 previous, though remained in contraction territory for the third straight month. Meanwhile, the gauge for the services sector surpassed consensus estimates and came in at 53.2 for the reported month, though was lower than the 54.5 recorded in May. This, in turn, acts as a headwind for the China-proxy Aussie and caps the AUD/USD pair.

The Australian Dollar (AUD) is further undermined by expectations that the Reserve Bank of Australia (RBA) will refrain from hiking interest rates in July. The bets were lifted by softer domestic data released on Wednesday, which showed that consumer inflation slowed to a 13-month low in May. The US Dollar (USD), on the other hand, stands tall near its highest level since June 13 and remains well supported by the Federal Reserve's (Fed) hawkish outlook. This, along with the upbeat US macro data released on Thursday, reaffirmed market bets for a 25-bps lift-off at the next FOMC meeting on July 25-26.

The prospects for further policy tightening by the US central bank remain supportive of a further rise in the US Treasury bond yields and continue to lend support to the USD. Market participants, however, seem reluctant to place aggressive bets and prefer to wait for the release of the US PCE Price Index, which will play a key role in influencing expectations about the Fed's future rate hike path. This, in turn, will drive the USD demand and provide a fresh directional impetus to the AUD/USD pair. Nevertheless, spot prices remain on track to register losses for the second successive week.

Technical levels to watch

AUD/USD

Overview
Today last price	0.6621
Today Daily Change	0.0005
Today Daily Change %	0.08
Today daily open	0.6616

Trends
Daily SMA20	0.6726
Daily SMA50	0.6674
Daily SMA100	0.6703
Daily SMA200	0.6692

Levels
Previous Daily High	0.6641
Previous Daily Low	0.6595
Previous Weekly High	0.6886
Previous Weekly Low	0.6663
Previous Monthly High	0.6818
Previous Monthly Low	0.6458
Daily Fibonacci 38.2%	0.6623
Daily Fibonacci 61.8%	0.6613
Daily Pivot Point S1	0.6594
Daily Pivot Point S2	0.6572
Daily Pivot Point S3	0.6549
Daily Pivot Point R1	0.664
Daily Pivot Point R2	0.6663
Daily Pivot Point R3	0.6685

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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