AUD/USD pares daily losses, turns flat near 0.7180
- AUD/USD recovered its daily losses during the American session.
- Falling US Treasury bond yields weigh on the greenback.
- Focus shifts to Commonwealth Bank PMI data from Australia.
The AUD/USD pair dropped to a fresh six-day low of 0.7136 on Thursday but staged a decisive rebound in the American trading hours. As of writing, the pair virtually unchanged on the day at 0.7180.
The broad-based USD strength forced the pair to push lower during the first half of the day. The US Dollar Index (DXY), which posted strong gains with the market reaction to FOMC Minutes, rose all the way up to 93.24 but failed to preserve its bullish momentum. A sharp drop seen in the US Treasury bond yields seems to have triggered another USD selloff. At the moment, the DXY is losing 0.22% on the day at 92.80 and the 10-year US T-bond yield is down more than 5%.
In the early Asian session on Friday, the Commonwealth Bank's Manufacturing and Services PMI data from Australia will be looked upon for fresh impetus.
AUD/USD near-term outlook
Commenting on AUD/USD's recent price action, “China’s ongoing recovery continues to underpin demand for industrial commodities. Of course, not all commodities are so buoyant but Westpac’s export-weighted commodity price index does provide substantial backing for the Aussie’s push to as high as 0.7276, its strongest point since Feb 2019,” said Westpac analysts.
“With the RBA in watch and wait mode and VIC virus cases trending lower, AUD should find support on dips towards 0.7100 and may well retest the high 0.72s in coming days,” analysts concluded.
Technical levels to watch for