- Bulls failed to capitalize on the US-China trade truce-led early uptick.
- Monday’s disappointing Chinese PMI print prompts some fresh selling.
- Traders now eye US ISM manufacturing PMI for a short-term impetus.
Having failed to capitalize on the initial gap to two-month tops, the AUD/USD pair met with some fresh supply and was now seen retreating farther below the key 0.70 psychological mark.
The latest positive trade-related development – wherein the US and China agreed to restart trade talks over the weekend, provided a modest lift to the China-proxy Australian Dollar and assisted the pair to build on its recent positive momentum.
The pair touched an intraday high level of 0.7035 – the highest level since May 1 but lacked any strong follow-through, rather met with some fresh supply following the disappointing release of Chinese Caixin Manufacturing PMI for June.
The index dropped back into contraction territory for the first time since March and added to the dismal official manufacturing PMI – released over the weekend, and turned out to be one of the key factors exerting some pressure on the major.
Meanwhile, the US Dollar witnessed some follow-through short-covering move as investors now seemed to have scaled back their expectations for a 50bps Fed rate cut move in July, which further collaborated to the pair’s intraday slide of around 40-pips.
Moving ahead, Monday’s US economic docket – highlighting the release of ISM manufacturing PMI, will now be looked upon for some fresh impetus later during the early North-American session.
Technical levels to watch
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