AUD/USD: Bulls keep flirting with 0.7200 ahead of China PMI
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AUD/USD: Bulls keep flirting with 0.7200 ahead of China PMI

  • AUD/USD stays on the front foot following its U-turn from 0.7120, refreshes the highest levels since April 07, 2019.
  • US Dollar Index slumps to mid-May 2018 bottom taking clues from devastating GDP, virus woes and political drama at home.
  • Aussie Building Permits, Import-Export Price Index couldn’t disappoint the pair buyers.
  • China’s official PMIs precede second-tier Aussie data to offer near-term direction.

AUD/USD buyers again attack 0.7200 with a high of 0.7198, currently 0.7190, at the start of Friday’s Asian session. The pair marks five-day winning streak while being at the highest in 15.5-month high.

Greenback weakness says in all…

The speeding up of the coronavirus (COVID-19) wave 2.0 and fears of the delay in the US stimulus package join downbeat GDP numbers from America and Germany to defy market sentiment. Even so, the AUD/USD pair, known as the risk-barometer, surges to the multi-week top. In doing so, the quote also ignores downbeat figures of second-tier data at home as well as the surge in the new cases of the pandemic.

Not only over 4.5 million new cases in the US and the strong outbreak of the virus in Victoria and Tokyo, recently surging figures from China and India also threatens the market players. Also challenging the risk-tone sentiment is the recent slump in the US and German GDP, respectively by 32.9% and 10.1%, as well as the Fed’s downbeat analysis and US policymakers’ inability to offer details of the much-awaited phase 4 fiscal package. Furthermore, also joining the league is the recent spat between US President Donald Trump and House Speaker Nancy Pelosi about the delaying of the American Presidential Elections, up for November.

It’s worth mentioning that the declines in the Aussie Building Permits and Import Price Index, as well as Export Price Index, couldn’t defy the pair bulls, not to forget about the Pacific major’s struggle with the pandemic.

Against this backdrop, Wall Street flashed mild losses and US 10-year Treasury yields slumped to the lowest since March 09 bottom, which was the all-time trough, by the end of Thursday’s North American close.

Moving on, China’s July month official PMI numbers become the key ahead of the Aussie Private Sector Credit for June and Producer Price Index (PPI) for the second quarter (Q2). Forecasts suggest that Chinese Manufacturing PMI may recede from 50.9 to 50.7 with Non-Manufacturing PMI likely stepping back from 54.4 to 51.2. Further, Australian Private Sector Credit is expected to rise from -0.1% to +0.2% MoM whereas PPI may inch up from 0.2% to 0.3% on the QoQ basis. While data from China signals the pair’s another pullback from the key 0.7200, pessimism surrounding the US can keep the bulls hopeful.

Technical analysis

Despite the higher high formation, AUD/USD prices will have to cross April 2019 top surrounding 0.7210 to confirm run-up towards March 2019 peak close to 0.7300. However, sellers are less likely to take the risk of entry unless witnessing a clear break below 0.7065/60 area including June 10 high and July 24 low.


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