The AUD/USD pair closed at 0.69227 after placing a high of 0.69829 and a low of 0.68563. Overall, the movement of the AUD/USD pair remained bullish throughout the day. The Australian dollar extended its previous day’s gains and rose for the 5th consecutive day on Wednesday to its five months highest level at 0.68929. However, the pair were pulled back in late session after the release of US economic docket.
Due to increased risk appetite in the market, the risk-sensitive Aussie gained traction in the market. The risk sentiment was favored by the reopening of economies, which boosted the expectations of faster economic recovery. Furthermore, the AIG Construction Index for May increased to 24.9 from April’s 21.66 and supported Aussie. At 6:30 GMT, the GDP for the first quarter from the Reserve Bank of Australia showed a contraction of 0.3%, which was expected as 0.4% and supported the Australian dollar.
Building Approvals in April were declined by 1.8%, which were expected to be declined by 10.8% and supported the Australian dollar. The upbeat economic data from Australia gave strength to Aussie, and hence, the pair AUD/USD moved in an upward direction in the earlier session on Wednesday.
At 6:45 GMT, the Caixin Services PMI from China showed the index moved above 50 levels to 55.0 against the expectations of 47.4 and supported China proxy Australian dollar, which added in the gains of AUD/USD pair on Wednesday. Moreover, the latest reports showed that Chinese firms bought US soybeans this week, which were against the highlights that China would not buy US farms products now, and the comments from US Senator Grassley that China-US trade deal was on track, gave some ease to the US-China tensions. This also supported the upbeat movement of the AUD/USD pair on Wednesday.
In American trading hours, after the release of US economic data in which ADP Non-Farm Employment Change showed a declined figure of jobless people as -2.76M against -9.0M and supported the US dollar. The ISM Services PMI was also surged to 45.4 from the expected 44.2 and supported the US dollar. The US dollar, which was weak due to risk sentiment, took some strength from upbeat economic data and then forced the pair AUD/USD to lose some of its daily gains.
Daily Technical Levels
Pivot Point: 0.6920
On the technical side, the AUD/USD pair is mostly unchanged, as it continues to consolidate in a sideways trading range of 0.6930 - 0.6880. On the 4 hour timeframe, the pair is forming tweezers top pattern, which is expected to drive bearish movement in the AUD/USD pair until support level of 0.6835 level. A 38.2% Fibonacci retracement level extends this support level. From a trading viewpoint, we should look for selling trades below 0.6920 level today. Good luck!