AUD/USD at session highs as China service activity expands at fastest pace in 4 months

AUD/USD jumped to a session high of 0.7447 after the Caixin China services PMI printed at 52.8; the fastest pace of expansion in 4 months.

The Aussie suffered a minor pull back to 0.7425 earlier today, before regaining the altitude. The bid tone around the AUD improved after the Melbourne Institute’s annualised inflation ticked higher. The spot extended gains further to 0.7450 following the China data release.

Moreover, the stronger China services activity growth offsets weaker expansion in manufacturing output.

Australia 10-year bond yield remains flat lined

Despite the positive China data, the 10-year Aussie government bond yield remains flat lined around 2.39%. Thus, Aussie bulls need to be cautious as the spike seen in the AUD may not last long unless yield responds positively.

AUD/USD Technical Levels

A break below 0.7422 (May 26 low) would open up downside towards 0.7368 (May 5 low). A daily close below the same could yield a re-test of 0.7328 (May 9 low) - 0.7300 (zero levels). On the other hand, a break above 0.7454 (June 1 high) would expose resistance at 0.7489 (50-DMA) and 0.7531 (200-DMA).

Despite Friday’s sharp rally to 0.7447, the daily RSI remains bearish below 50.00.