AUDUSD falls for the second day in a row, although there is no follow-through selling.
The AUDUSD pair is under selling pressure for the second day in a row on Tuesday. With minimal reaction to better-than-expected Chinese statistics. Spot prices are currently trading in the 0.6615-0.6610 range. Down less than 0.10% on the day. As traders await the Reserve Bank of Australia (RBA) policy announcement.
A milder risk tone is viewed as a significant factor undermining the risky AUDUSD.
According to a private pollI in November, economic activity in China’s services sector increased at a quicker rate. The Caixin Services PMI in China increased to 51.5 in November from 50.4 in October. Exceeding forecasts for a reading of 50.8. However, this has little impact on the AUDUSD pair or provides any substantial momentum in the context of a generally lower risk tone. Which tends to undermine the risk-sensitive Australian Dollar (AUD).
Dovish Fed expectations underpin the USD and provide some support ahead of the RBA decision.
Meanwhile, dovish Federal Reserve (Fed) views have kept the recent US Dollar (USD) recovery from a multi-month low in check. This, in turn, helps minimize the AUDUSD pair’s downside risk ahead of the important central bank event risk. The RBA is widely expected to maintain current interest rates. As a result, investors will be looking for clues regarding future rate hikes. Before placing new directional bets around the major, there should be some stickiness in Australian inflation.
The announcement of the China Caixin Services PMI, which was stronger than predicted, did little to impress bulls.
Traders will draw cues from the release of the US ISM Services PMI later in the early North American session. This, together with US bond yields and overall risk sentiment, will increase demand for the safe-haven buck and allow traders to take advantage of short-term chances around the major.
