- AUD/USD is staging a modest rebound following Tuesday’s drop.
- US Dollar Index consolidates gains, holds above 93.00.
- Focus shifts to ADP Employment Change data from US.
After falling sharply on Tuesday, the AUD/USD pair edged modestly higher during the first half of the day on Wednesday and touched a session high of 0.7623. As of writing, the pair was up 0.22% on the day at 0.7611.
DXY loses momentum following Tuesday’s upsurge
Earlier in the day, the data from China showed that the business activity in the manufacturing and the service sectors both expanded at a stronger-than-expected pace in March. Additionally, the Australian Bureau of Statistics reported that Building Permits in February increased by 21.6% and beat the market expectation of 5% by a wide margin. These upbeat data provided a boost to the AUD during the Asian trading hours.
On the other hand, the US Dollar Index (DXY) seems to have gone into a consolidation phase ahead of key macroeconomic data releases. The DXY is currently posting modest losses at 93.22 and helping AUD/USD limit its losses.
The ADP Employment Change, Chicago Purchasing Managers’ Index and Pending Home Sales will be featured in the US economic docket.
More importantly, US President Joe Biden is scheduled to present the infrastructure package, which will amount to nearly $2 trillion over an eight-year span. If risk flows dominate the financial markets in the second half of the day, AUD/USD could look to build on its daily gains.
In the meantime, the 10-year US Treasury bond yield is up 1% on the day at 1.723% and a break above critical 1.75% mark could trigger another rally in yields and help the USD start outperforming its rivals.
Technical levels to watch for
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