- AUD/USD bulls took a breather near 100-day SMA on mixed Chinese PMIs.
- The upbeat market mood, softer USD might continue to help limit any fall.
The AUD/USD pair lacked any firm intraday direction and seesawed between tepid gains/minor losses through the Asian session on Thursday.
Following the recent strong positive move to seven-week tops, the pair took some breather near 100-day SMA following the release of softer Chinese Manufacturing PMI on Thursday. In fact, China’s official Manufacturing PMI came in at 50.8 for April as compared to 51.0 expected and the previous month’s reading of 52.0.
A slight disappointment from the headline reading was largely negated by the fact that the data still pointed to an expansion in the manufacturing activity. This coupled with stronger-than-expected gauge for the services sector extended some to the China-proxy Australian dollar and helped limit any meaningful slide for the major.
On the other hand, the US dollar remained depressed on the back of Wednesday’s dismal US GDP report and the FOMC monetary policy update. This comes amid the upbeat market mood and the latest optimism over the re-opening of economies in some parts, which further benefitted perceived riskier currencies, including the aussie.
It is worth recalling that the advance US GDP report showed that the economic activity contracted sharply by 4.8% during the first quarter of 2020. Adding to this, the Fed cautioned that the negative impact from the coronavirus pandemic could prolong in the medium term and also left the door open to more monetary easing.
Meanwhile, the pair’s subdued trading action might still be categorized as a consolidation phase near a technically significant moving average. Hence, any dips might still be seen as a buying opportunity and should help limit the downside. Market participants now look forward to Initial Weekly Jobless Claims data from the US for a fresh impetus.
Technical levels to watch
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