AUD/USD retreats below 0.6750 amid broad USD strength
- US private sector employment rose 291,000 in December.
- Upbeat PMI data provide boost to greenback on Wednesday.
- Coming up: Trade Balance and Business Confidence data from Australia.
The AUD/USD erased a large portion of its daily gains during the American trading hours pressured by the broad-based USD strength. As of writing, the pair was trading at 0.6748, still up 0.15% on a daily basis.
Earlier in the day, Reserve Bank of Australia Governor Lowe's hawkish comments and the upbeat PMI data from Australia helped the pair extend its rebound.
Lowe noted that rate cuts have worked to lower the AUD and added that he would be surprised to see negative GDP growth in the first quarter of the year despite the coronavirus outbreak and bushfires. Additionally, the Commonwealth Bank Manufacturing and Services PMI both recovered above the 50 mark in January to show that the business activity in both sectors expanded at the start of the year.
Strong US data lift USD
In the second half of the day, however, the strong ADP and PMI figures from the US helped the greenback outperform its major rivals with the US Dollar Index rising to its highest level since early December at 98.32. As of writing, the index was up 0.3% on the day at 98.23.
The ADP Employment Change printed +291K in December, the highest reading in more than four years, and the Markit Services PMI and the IHS Non-Manufacturing PMI 53.4 and 55.5, respectively, to beat analysts' estimates.
During the Asian session on Thursday, Trade Balance and National Australia Bank's Business Confidence data will be looked upon for fresh impetus.
Technical levels to watch for