- AUD/USD edges lower on softer Chinese Services PMI/risk-off mood.
- A subdued USD demand/trade optimism helped limit any further fall.
The AUD/USD pair failed to capitalize on the early Asian session uptick and is currently placed near the lower end of its daily trading range, below mid-0.6900s.
The pair initially edged lower following the release of AIG Manufacturing Index from Australia. The attempted positive move lacked any strong follow-through, rather fizzled out quickly in reaction to the disappointing release of Chinese Caixin Services PMI for December.
Downside remains cushioned
Apart from softer Chinese PMI print, the Aussie was further weighed down by the prevalent risk-off mood amid concerns over a further escalation of geopolitical tensions in the Middle East. However, a combination of factors helped limit further downside, at least for now.
The global flight to safety led to some follow-through weakness in the US Treasury bond yields, which kept the US dollar bulls on the defensive and extended some support. This coupled with US-China trade optimism further underpinned the China-proxy Australian dollar.
It will now be interesting to see if the pair is able to attract any meaningful buying interest at lower levels or continues with its recent retracement slide from multi-month tops – levels beyond the key 0.70 psychological mark set last Tuesday.
In the absence of any major market-moving economic releases from the US, the broader market risk sentiment might continue to influence the momentum and might assist traders to grab some short-term opportunities.
Technical levels to watch
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