- Data revealed a sluggish expansion in China’s services activity.
- The world’s second-largest economy is experiencing a faltering post-pandemic recovery.
- Traders await the release of the minutes of the Federal Reserve’s recent meeting.
Today’s AUD/USD price analysis is bearish. Australia’s dollar weakened along with the Chinese yuan due to data revealing a sluggish expansion in China’s services activity. A private-sector survey revealed that China’s services activity grew at its slowest rate in five months in June. Notably, there was a loss of momentum in the post-pandemic recovery due to weakening demand.
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The Caixin/S&P Global services PMI declined from 57.1 in May to 53.9 in June. This marked the lowest reading since January. Moreover, this is the latest indication of a faltering post-pandemic recovery in the world’s second-largest economy. Consequently, the Australian dollar dropped, breaking a four-day winning streak.
Before the Chinese services data, the Australian dollar had gained some strength following a stronger yuan fixing by the People’s Bank of China. These fueled expectations of immediate policy support from Beijing.
In a client note, Tony Sycamore from IG in Sydney said that the services data further confirms a potential double-dip slowdown in the Chinese economy. Furthermore, he acknowledged that it is not positive news for the Australian dollar in the short term. However, he also stated that it would provide support in a broader context. Markets now anticipate an imminent policy response from Chinese authorities.
Meanwhile, the US dollar stayed within the middle range of its three-week period against major peers. Traders awaited the release of minutes of the Federal Reserve’s recent meeting to gain insight into the future of monetary policy.
AUD/USD key events today
Investors will focus on the FOMC meeting minutes that will show reasons for the pause at the last Fed meeting. It might also shed light on future Fed policy moves.
AUD/USD technical price analysis: Price bounces lower at the 0.6700 resistance.
AUD/USD is pulling back after reaching the 0.6700 resistance level. Still, the bias is bullish because the price trades above the 30-SMA, a sign bulls are in charge. Moreover, bullish momentum is strong, with the RSI over 50.
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If the pullback continues, the price will likely retest the 30-SMA before pausing. Bulls will most likely be waiting at the SMA to resume the bullish move by taking out the 0.6700 resistance level.
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Saqib Iqbal
