AUD/USD remains on the defensive near the 0.6530 mark ahead of US data

• AUD/USD remains under pressure around the 0.6530 mark on Thursday.
• The Australian Trade Balance was A$11,321M, lower than the A$11,791M recorded in May.
• The employment data could convince the Federal Reserve (Fed) to hike additional rates this year.

The AUD/USD pair extends its downside above the 0.6500 area during the Asian session on Thursday. The pair loses traction for the second consecutive day following the softer Australian data and the risk-off mood in the market. AUD/USD currently trades around 0.6532, losing 0.1% for the day.

The latest data from the Australian Bureau of Statistics (ABS) showed that the Australian Trade Balance was A$11,321M, marginally lower than the A$11.791M recorded in May. Exports declined 2% as coal, mineral fuels, and metals shipments slowed in response to a decline in commodity demand in China. However, the decline in exports was offset by a 4% decline in imports in May. Meanwhile, Retail Sales QoQ came in at -0.5% from -0.6% prior.

The Reserve Bank of Australia (RBA) Governor Phillip Lowe remarked that the decision to keep rates intact gives the RBA more time to analyse the impact of the interest rate hikes and the economic outlook. However, more monetary policy tightening may be necessary to guarantee that inflation returns to target in a reasonable timeframe, but this will depend on the data and the developing risk assessment.

It’s worth noting that China’s Caixin Services PMI climbed to 54.1 in July from 53.9 prior, better than the market consensus of 52.5. The upbeat Chinese economic figure could benefit the China-proxy Australian Dollar (AUD). 

On the US Dollar front, Automatic Data Processing Inc. (ADP) revealed on Wednesday that the number of employed people in the US private sector rose by 324K, above estimates of 189K and lower than the revised reading of 455,000 in June. This figure is above the 12-month average. The employment data could convince the Federal Reserve (Fed) to hike additional rates this year, which benefits the US Dollar and acts as a headwind for AUD/USD.

Market participants will take cues from the US weekly Jobless Claims, Unit Labour Costs and ISM Service PMI later in the North American session. On Friday, attention will shift to the US Nonfarm Payrolls. The US economy is expected to have created 180,000 jobs.