AUD/USD remains on track to post its lowest daily close in nearly 3 years around 0.70

• Concerns over a slowdown in Chinese economy weighs on AUD.
• US Dollar Index rebounds sharply on Wednesday.
• Coming up: TD Securities inflation report.

The AUD/USD pair broke below the critical 0.70 mark on Wednesday and slumped to its lowest level since January 2016 at 0.6982 before staging a modest technical correction in the late NA session. As of writing, the pair was down 0.77% on the day at 0.6998.

Earlier today, China Finance, a magazine published by the PBoC, painted a gloomy picture regarding the economic performance. “The trend of economic slowdown still continues, and the slowing momentum is increasing. The fourth quarter GDP growth is very possible to be lower than 6.5 percent,” the article read and revived concerns over the potential negative impact of a weaker Chinese economic growth on the global economy. Amid the strong trade ties between China and Australia, the AUD suffered heavy losses against its rivals.

On the other hand, the greenback returned from the New Year break on a positive note and gathered strength as a safer alternative to its risk-sensitive European counterparts. The US Dollar Index, which tracks the greenback against its rivals, rose to a 5-day high near 97 to ramp up the bearish pressure on the pair.

In the early trading hours of the Asian session on Thursday, TD Securities’ December inflation report will be looked upon for fresh impetus. However, markets’ risk perception and the dollar’s performance is likely to remain as the primary driver of the pair’s price action.

Technical levels to consider