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  • AUD/USD benefits from Commonwealth Bank activity numbers.
  • An absence of negative signals from Trade/Brexit headlines keeps the Aussie away from further declines.
  • The US statistics, trade/Brexit news will be followed for fresh impulse.

With mixed readings of activity numbers, AUD/USD holds on to recovery gains while flashing 0.6855 as a quote during early Thursday morning in Asia.

Preliminary readings of October month Commonwealth Bank Purchasing Managers’ Index (PMI) suggest the manufacturing PMI has grown more than 49.0 forecasts to 50.1 while Services counterpart lagged below 52.2 to 50.8. With this, the Composite PMI declined below 52.0 to 50.7.

While the risk of no-deal Brexit is mostly avoided and taken care of, recent news from The Sun mentioned the Tory revolt against the United Kingdom (UK) Prime Minister (PM) Boris Johnson.

In a case of the US-China trade deal, diplomats from both the ends are trying to portray a rosy picture of efforts and likeliness of a trade deal. However, the United States’ (US) proposal to have an anti-dumping investigation on Chinese aluminum exporters isn’t a hidden thing while China’s readiness to counter the US pressure by taking the help from the World Trade Organization (WTO) also shows a cold war.

Given the absence of data on the Australian side during the rest of the day, investors will keep an eye over trade/Brexit headlines for fresh impulse. However, the economic calendar gets active during the US session with data ranging from activity numbers to Durable Goods Orders up for publishing. Among them, Durable Goods Orders is likely to gain major market attention.

“We expect durable goods orders to post a -1.3% m/m contraction in September (mkt: -0.7%) largely on the back of a large decline in vehicle new orders. More importantly, we expect both core orders series to also disappoint in September, with durables ex-transportation and core capex orders declining -0.2% and -0.8%, respectively. Separately, the Kansas City Fed index and the preliminary Markit survey should provide additional clues regarding the performance of the manufacturing sector in October, says TD Securities.

It should also be noted that the US Dollar’s (USD) reaction to the European Central Bank (ECB) meeting outcome will also be the key. Today’s ECB will be the last under the presidency of Mario Draghi before Christine Lagarde takes his seat. No fireworks are expected from the meeting after the last one’s heavy dose of monetary easing.

Technical Analysis

Only a sustained break above 0.6900 mark, which crosses September month top, could propel the pair towards July 10 low nearing 0.6910 before highlighting 0.6950 for buyers. Absence of which could keep the sellers on the lookout for 0.6811/10 horizontal support including highs of September 20 and October 11.