- AUD/USD gained some traction following the release of upbeat Chinese PMI prints.
- The uptick lacked any follow-through amid worries about rising coronavirus cases.
- A modest pickup in the USD demand further contributed towards capping the gains.
The AUD/USD pair failed to capitalize on its early uptick to the 0.6885 region and has now dropped to the lower end of a near one-week-old trading range.
The pair gained some traction during the Asian session on Tuesday following the release of better-than-expected Chinese data. In fact, China’s official Manufacturing PMI rose to 50.9 in June from 50.6 previous, beating estimates pointing to a reading of 50.4. Adding to this, China’s Non-Manufacturing PMI also surpassed expectations and came in at 54.4 for June.
However, the ever-increasing coronavirus cases globally served as a warning that the road to recovery will be much slower than expected. This, in turn, continued weighing on investors’ sentiment, which benefitted the safe-haven US dollar and kept a lid on any strong gains for the perceived riskier Australian dollar, rather prompted some fresh selling.
The pair quickly retreated around 40-45 pips from the daily swing high level of 0.6885. Some follow-through selling below mid-0.6800s now seems to accelerate the fall further towards the 0.6800 round-figure mark. Failure to defend the mentioned level, leading to a subsequent weakness below the 0.6775 region now seems to pave the way for a further near-term depreciating move.
Moving ahead, market participants now look forward to the US economic docket – featuring the release of Chicago PMI and the Conference Board’s Consumer Confidence Index. Later during the US session, the Fed Chair Jerome Powell, along with Treasury Secretary Steven Mnuchin will testify before the House Financial Services Committee and produce some trading opportunities.