AUD/USD steadies near 0.6700, looks to close the day flat
- US Dollar Index drops to 99 area amid falling Treasury bond yields.
- Private sector employment data from the United States disappoints.
- Coming up: Purchasing Managers' Index (PMI) and trade balance data from Australia.
The AUD/USD pair rebounded modestly in the second half of the day on Wednesday and retraced its daily drop that caused the pair to touch its lowest level in nearly a decade at 0.6672. As of writing, the pair was virtually unchanged on a daily basis at 0.6702.
The dovish tone that the Reserve Bank of Australia (RBA) adopted in its monetary policy statement on Tuesday after announcing 25 basis points cut to its policy rate weighed on the AUD.
However, resurfacing recession fears in the United States (US) amid dismal macroeconomic data releases caused the US Treasury bond yields to fall sharply and hurt the Greenback. The US Dollar Index erased all of its weekly gains and is now testing the 99 handle, losing 0.15% on the day.
The US economy is showing sings of a slowdown
The Institute for Supply Management's (ISM) Purchasing Managers' Index (PMI) data showed that the economic activity in the US manufacturing sector contracted at its stronger pace in ten years. Furthermore, the Automatic Data Processing (ADP) in its monthly report on Wednesday revealed that the employment in the private sector rose 135,000 in September and fell short of the market expectation of 140,000.
On Thursday, the Services and Composite PMI published jointly by Markit Economics and the Commonwealth Bank of Australia will be looked upon for fresh impetus. Additionally, the Australian Bureau of Statistics will release the trade balance data.
Technical levels to watch for