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   “¢   Upbeat Aussie building permits data triggers the initial leg of up-move.
   “¢   The ongoing slide in US bond yields added to the prevalent USD weakness.
   “¢   Traders seemed to have largely ignored dismal Chinese PMI numbers.

The AUD/USD pair maintained its bid tone through the mid-European session and is now holding comfortably above the 0.7400 handle ahead of the US data.

The pair built on last Friday’s goodish rebound from 0.7370 level and continued scaling higher for the third consecutive session on Tuesday. The initial leg of up-move was supported by upbeat Australian data that showed that building permits rose 6.4% in June, surpassing expectations of a flat reading and reversing previous month’s contraction of 3.2%.

This coupled with the prevalent US Dollar selling bias, further fueled by the ongoing slide in the US Treasury bond yields, helped offset dismal Chinese PMI numbers and remained supportive of the positive momentum. The official China non-manufacturing PMI revealed that the pace of expansion in the service sector activity slowed in July, while the manufacturing PMI also fell short of consensus estimates.  

Meanwhile, a subdued action around commodity prices, especially copper, did little to influence demand for the commodity-linked Australian Dollar, with the USD price dynamics turning out to be an exclusive driver of the pair’s ongoing up-move.  

It, however, remains to be seen if bulls are able to maintain their dominant position or once again fail near mid-0.7400s as focus shifts to a slew of US economic releases – personal income/spending data, core PCE price index, followed by Chicago PMI and the Conference Board’s consumer confidence index.

Technical levels to watch

Any subsequent up-move is likely to face resistance near the 0.7450-60 region, above which the pair seems all set to aim towards reclaiming the key 0.7500 psychological mark. On the flip side, the 0.7400 handle now seems to protect the immediate downside, which if broken might accelerate the fall back towards 0.7370 horizontal support.