FXStreet (Mumbai) – A classic risk-off environment in Asia combined with weak Australian trade figures pose double whammy for the AUD/USD pair, and knocked it off to fresh five-day lows ahead of 0.70 handle, before recovering some ground to now trade near 0.7030 region.
AUD/USD supported at 0.70 handle
Currently, the AUD/USD pair trades -0.18% lower at 0.7026, recovering from a dip to session lows reached at 0.7003 last hours. The AUD bulls were offered support from stronger than expected Chinese services PMI data and lifted the Aussie from lows near 0.7000. The Chinese services sector activity for Jan grew at the fastest pace in 6 months, coming in at 52.4 versus 50.5 expected, and compared to 50.2 last.
The AUD/USD pair was heavily offered earlier on the day after the domestic trade data surprised markets to the downside, while the overnight rout in the oil prices also continued to weigh on the resource-linked Aussie. The trade gap grew from $2.73 billion in November to $3.54 billion in December, coming in much worse than the market forecast of a $2.45 billion deficit.
Meanwhile, markets ignored the upbeat building consents data as risk-off sentiment continued to drive markets. Looking ahead, the US ADP report and Australia consumer confidence data are up next on the cards, and will be closely watched by markets amid ongoing weakness in oil.
AUD/USD Levels to watch
The pair heads higher and finds the immediate resistance at 0.7050/62 (round number/ 5-DMA) above which gains could be extended to the next hurdle located at 0.7073/96 (1h 100-SMA/ daily R1). On the flip side, the immediate support located at 0.7003/00 (daily low/ round number). Selling pressure is likely to intensify below the last, dragging the Aussie to 0.6986 (20-DMA).
(Market News Provided by FXstreet)