AUD/USD bounces off multi-day low towards 0.6600 after Australia/China data but lacks follow-though

• AUD/USD struggles to defend latest gains despite bouncing off three-week low.
• Australia Q2 Retail Sales improves, trade surplus shrinks in June.
• China Caixin Services PMI unexpectedly rises to 54.1 in July.
• Talks of RBA’s policy pivot, cautious mood keep Aussie bears hopeful.

AUD/USD refreshes intraday high near 0.6560 while justifying the absence of major disappointment from the latest Australian and Chinese statistics during early Thursday. However, the Aussie pair lacks bullish bias amid a cautious mood ahead of a slew of US data.

That said, China’s Caixin Services PMI jumps to 54.1 in July from 53.9 prior and 52.5 market expectations.

Earlier in the day, the Australian Bureau of Statistics (ABS) unveiled details of the nation’s preliminary readings of the second quarter (Q2) Retail Sales and foreign trade numbers for June. The details suggest a slight improvement in the Aussie Q2 Retail Sales, to -0.5% QoQ from -0.6% prior, as well as a deterioration in the Trade Balance that eased to 11,321M compared to 11,791M in previous readouts and 11,000M expected.

It’s worth noting that the US Dollar Index (DXY) prints mild losses near 102.50 as bulls take a breather at the highest levels in three weeks. The Greenback’s latest retreat could be linked to its inability to cross a downward-sloping resistance line from May 31, around 102.75 at the latest, as well as the market’s preparations for the top-tier US data.

Furthermore, mild gains of the S&P500 Futures and a pullback in the US 10-year Treasury bond yields from the highest level since November 2022 also allow the AUD/USD pair to lick its wounds at the lowest level in three weeks.

It’s worth noting, however, that the bearish bias about the Reserve Bank of Australia (RBA) gains momentum and joins the market’s cautious mood to keep the Aussie pair sellers hopeful.

Looking forward, the market’s consolidation may allow the Aussie pair to defend the latest gains ahead of US ISM Services PMI, Factory Orders, Weekly Initial Jobless Claims and quarterly readings of Nonfarm Productivity and Unit Labor Costs.

Technical analysis

Despite the latest corrective bounce amid the nearly oversold RSI (14), the AUD/USD bears keep the reins unless witnessing a daily close beyond the 10-month-old rising support line, now immediate resistance near 0.6590. With this, the sellers eye the yearly low marked in May around 0.6460.