- The USD remains well supported by the Fed’s hawkish outlook.
- Slightly better Chinese PMI helped limit deeper losses, for now.
- Traders now eye US ISM PMI for some short-term opportunities.
The AUD/USD pair failed to capitalize on its intraday recovery move and remains well within the striking distance of seven-month lows set earlier this Thursday.
The pair extended its recent sharp pullback from near three-month tops and continued losing ground for the tenth straight session on Thursday – marking its longest losing streak since 2015, amid the post-FOMC US Dollar upsurge.
The Fed, as was widely expected, delivered a 25 bps rate cut on Wednesday but the lack of commitment for further rate cuts continued fueling the recent USD bullish run and exerted some heavy downward pressure on the major.
The pair dropped back closer to the early-Jan. flash crash lows during the Asian session on Thursday, albeit managed to find some support following the release of slightly better-than-expected Chinese Manufacturing PMI.
The Caixin China Manufacturing PMI index rebounded to 49.9 in July as compared to 49.4 previous and provided a minor lift to the China-proxy Australian Dollar, though the uptick lacked any strong bullish conviction.
The fact that US-China trade negotiations concluded without a major breakthrough, coupled with deteriorating global risk sentiment kept a lid on any meaningful recovery for perceived riskier currencies – like the Aussie.
Hence, it will be prudent to wait for a strong follow-through buying, possibly beyond the previous session’s swing high near the 0.6900 handle, before confirming that the pair might have bottomed out in the near-term.
Moving ahead, Thursday’s US economic docket – highlighting the release of ISM manufacturing PMI, will now be looked upon for some short-term trading impetus later during the early North-American session.
Technical levels to watch
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