AUD/USD turns positive on the day, trades near 0.7780 ahead of US PMI data
- AUD/USD gained traction after dropping below 0.7750 on Friday.
- US Dollar Index posts small daily gains, stays below 90.00.
- Investors await Markit Services and PMI data from US.
After trading in a relatively tight range during the Asian session, the AUD/USD pair dropped to a daily low below 0.7740 but managed to regain its traction. As of writing, the pair was up 0.06% on the day at 0.7780.
Eyes on US PMI data
Following Thursday's climb, AUD/USD staged a technical correction but the risk-on market environment and the USD's uninspiring performance allowed the pair to reverse its direction.
At the moment, the 10-year US T-bond yield is losing 1% on the day and keeping the USD's upside limited. Although the US Dollar Index is posting small gains at 89.85, this seems to be the product of a sharp drop witnessed in the EUR/USD pair rather than a renewed, broad-based USD strength. Furthermore, Wall Street's main indexes look to open in the positive territory, suggesting that the greenback could struggle to outperform its risk-sensitive rivals.
Later in the session, the IHS Markit will release May's preliminary Manufacturing PMI and Services PMI reports for the US.
Earlier in the day, the data from Australia showed that the Commonwealth Bank Manufacturing PMI improved modestly to 59.9 in May from 59.7 in April and the Services PMI edged lower to 58.2 from 58.8. Nevertheless, the market reaction to these mixed reading was largely muted.
Technical levels to watch for