AUD/USD defends the 0.6480 support as focus shifts to US ISM Services PMI

• AUD/USD has picked bids around 0.6480 as risk-on rebounds after yields dropped to near 3.62%.
• Investors are awaiting the release of the US ISM Services PMI and ADP job data for making informed decisions.
• The aussie bulls remained lackluster despite better-than-former S&P PMI data.

The AUD/USD pair has sensed buying interest around 0.6480 as the pullback move in the US dollar index (DXY) seems terminating now. Traction is returning towards the risk-on market profile as yields have dropped from day’s high. The 10-year US Treasury yields have eased sharply after recording the day’s high at 3.64% and have slipped to 3.62% while writing.

It could be concluded that the DXY is sensing pressure ahead of the release of the US ISM Services PMI data. As per the consensus, the US ISM Services PMI will decline to 56.0 vs. the prior release of 56.9. It seems that the continuation of the policy tightening stance by the Federal Reserve (Fed) has started displaying its consequences. Retail demand is curtailing now and eventually, the service industry is taking a hit.

Adding to that, the US ISM Services New Order Index data is seen significantly lower at 58.9 against the prior release of 61.8. A decline in the forward-looking indicator is expected to bring sheer volatility to the DXY.

Apart from the Services PMI data, US Automatic Data Processing (ADP) Employment Change data will remain in focus. The consensus for economic data indicates that the US economy has added 200k jobs in the labor market in September vs. the former release of 132k.

Meanwhile, returning optimism in markets is supporting the aussie. In early Asia, IHS Markit reported the S&P PMI data. The Composite PMI released higher at 50.9 against the prior figure of 50.8 while the Services PMI gained to 50.6 against the projections of 50.4.