AUD/USD regains 0.6700 in a corrective bounce ahead of Australia trade numbers, China PMI

• AUD/USD picks up bids to pare recent losses, snaps two-day downtrend.
• RBA’s Lowe fails to convince markets of the Aussie central bank’s hawkish capacity after pausing rates.
• US Dollar rebound, sour sentiment also weighs on the risk-barometer pair.
• Australia’s trade numbers, China Caixin Services PMI will be important to watch for clear directions.

AUD/USD picks up bids to pare recent losses around 0.6720 as it braces for the Aussie foreign trade numbers for February and China’s Caixin Services PMI for March on early Thursday. The Aussie pair dropped in the last two consecutive days despite softer US data as the Reserve Bank of Australia’s (RBA) pause to the rate hike trajectory pushed back the bulls even if Governor Philip Lowe tried to recall them.

On Wednesday, Reserve Bank of Australia (RBA) Governor Philip Lowe tried to appease hawks, following the RBA’s pause in rate hikes. The Policymaker ruled out rate cuts while also saying, “Balance of risks lean toward further rate rises.”

On the other hand, the US Dollar rebound amid recession woes and ignored the downbeat data. That said, the ADP Employment Change for March dropped to 145K from 200K expected and an upwardly revised prior of 261K. On the same line, the final readings of S&P Global Composite and Services PMIs for March also came in downbeat as the former one declined to 52.3 from 53.3 preliminary estimations while the Services PMI dropped to 52.6 from 53.8 anticipated earlier. More importantly, the US ISM Services PMI for the said month amplified pessimism as it dropped to 51.2 versus 54.5 expected and 55.1 prior.

Against this backdrop, the recession woes in the US grew stronger and weighed on the sentiment. The same marked downbeat Wall Street close and drowned the US Treasury bond yields. However, the sour sentiment allowed the US Dollar Index (DXY) to recover from a two-month low and snap a two-day downtrend.

Looking ahead, Australia’s monthly Trade Balance, Exports and Imports for February will precede  China’s Caixin Services PMI for March to direct immediate AUD/USD moves. Given the dovish RBA, the Aussie pair is likely to remain pressured unless the data provides positive surprise.

Technical analysis

A daily closing below one-month-old support line near 0.6680 becomes necessary for the AUD/USD bears to retake control.