In response to resurgent USD demand, the AUD/USD saw some new supply near the 0.7600 level.
Following the release of a weaker US ISM Services PMI for June, the USD maintained its bid tone.
The market’s attention will be drawn to the minutes of the FOMC policy meeting, which are due on Wednesday.
The AUD/USD pair has now retreated to the lower end of its intraday trading range, back around mid-0.7500s, after surrendering a large portion of its intraday advances to over one-week highs.
The pair struggled to profit from its strong intraday uptrend and failed near the 0.7600 round-figure mark once more. The appearance of some substantial selling around the shared currency in reaction to the dismal announcement of the ZEW poll results aided the US dollar. This was interpreted as a crucial reason, prompting new selling across the AUD/USD pair.
Concerns about the extremely contagious Delta version of the coronavirus, on the other hand, continued to weigh on investors’ minds. The general cautious sentiment in the equity markets reflected this. Another aspect that functioned as a tailwind for the safe-haven greenback was that flows were diverted away from the perceived riskier aussie.
The dollar remained stable, seemingly unmoved by the US ISM Services PMI’s lower-than-expected reading of 60.1 in June, compared to consensus expectations of 63.5. Furthermore, the employment sub-component of the report fell short of market forecasts, but this was partially offset by the report’s slightly better-than-expected Prices Paid component.
Meanwhile, lower probabilities of the Fed tightening policy sooner than expected may deter USD bulls from making aggressive wagers, limiting the AUD/USD pair’s downside. Investors appear to have been persuaded by Friday’s mixed US jobs report that the US central bank will delay reducing its asset purchases or hiking interest rates for a longer period of time. This, combined with a new low in US Treasury bond yields, might put the dollar under pressure.
As a result, before concluding that the current rally from YTD lows has run out of steam and positioning for any further loss, it will be advisable to wait for any substantial follow-through selling. The market’s attention will be drawn to the release of FOMC meeting minutes on Wednesday. Investors will be on the lookout for new signals about the Federal Reserve of the United States’ monetary policy outlook, which will have a significant impact on USD price dynamics and provide a new directional push to the AUD/USD pair./n
