AUD/USD continues to push higher toward 0.68

• Australian economic activity expands by 0.5% in the second quarter.
• China’s Caixin Services PMI improves to 52.1 in August from 51.6.  
• US Dollar Index stays in red near 98.60 on Wednesday.

The AUD/USD pair staged a decisive recovery on Tuesday and continued to push higher today supported by upbeat data from Australia and China. As of writing, the pair was trading at its highest level in two weeks at 0.6790, adding 0.5% on a daily basis.

RBA to stay on hold after GDP data

Earlier today, the  Australian Bureau of Statistic reported that the real gross domestic product (GDP) expanded by 0.5% in the second quarter to match the previous quarter’s reading and the market expectation. The annual growth rate edged lower to  1.4% but came in line with analysts’ estimates. Additionally, China’s Caixin Services PMI improved to 52.1 in August from 51.6 in July and provided an additional boost to the AUD.

Commenting on the GDP data,  “While today’s print is below the Reserve Bank of Australia’s (RBA)  0.75%/q forecast, the result is not a green light for the RBA to cut next month with GDP now having stabilised for two quarters, arguing for a ‘wait and see’ approach from the RBA,” said TD Securities analysts.

On the other hand, the disappointing manufacturing PMI data from the US yesterday put the USD under pressure and helped the pair preserve its bullish momentum. As investors are starting to price an aggressive rate cut by the Federal Reserve later this month, the US Dollar Index is losing 0.35% on the day at 98.60.

Trade balance data from Australia will be released during the early trading hours of the Asian session on Thursday.

Technical levels to watch for