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  • AUD/USD responds to weaker than forecast China’s Caixin Services PMI.
  • Aussie PMIs have been upbeat off-late.
  • Developments surrounding the US-Iran tussle, second-tier US data will be in the spotlight.

AUD/USD declines to 0.6940 after Caixin released monthly Services PMI data on early Monday. The pair earlier benefited from the second-tier PMI data from Australia. However, the US-Iran tussle weighed on the market sentiment and capped the pair’s pullback from one week low.

Read: The China Caixin Services Dec PMI: 52.5 vs 53.5 prior

Be it AiG Performance of Mfg Index or PMIs from the Commonwealth Bank, December month activity data from Australia have been upbeat off-late.

The US Federal Reserve Bank of New York President John Williams recently emphasized the need to stick to a 2% inflation target. The same could also be considered to have triggered the US dollar (USD) pullback despite the latest buying on the back of US-Iran tension.

If we observe the latest headlines concerning the risk from Iran, warnings of the upcoming war between the US and the Middle East can be easily smelt. As a result, the market’s risk-tone has been heavier with the US 10-year treasury yields declining to one month low near 1.77%.

While most of the scheduled data is out, market players will follow the developments surrounding the geopolitical tension emanating from the Middle East.

Technical Analysis

An ascending trend line since November 29, at 0.6930 now, offers immediate support while 0.7000 round-figure limits near-term advances.