AUD/USD retreats to 0.5900 area ahead of US PMI data
- Australian PM says government is extending restrictions on social movements measures.
- Manufacturing sector in Australia stays resilient in March despite coronavirus.
- Preliminary Manufacturing and Services PMI from US are coming up next.
The AUD/USD pair rose steadily during the Asian trading hours on Tuesday and touched a daily high of 0.5975 in the early European session before going into a consolidation phase. As of writing, the pair was trading at 0.5913, adding 1.5% on the day.
The upbeat market sentiment seems to be helping the risk-sensitive AUD erase the losses it suffered against the greenback in the past couple of weeks. Additionally, the Reserve Bank of Australia continues to support the economy by injecting liquidity into the financial system. Moreover, the Commonwealth Bank's Manufacturing PMI in Australia came in at 50.1 in March to reveal that the activity in the manufacturing sector continued to expand.
USD struggles to find demand ahead of PMI data
On the other hand, the Federal Reserve's drastic decision to launch an open-ended QE on Monday weighs on the greenback to provide a boost to the pair. The US Dollar Index is down more than 1% on Monday to mirror the broad-based USD weakness.
Meanwhile, Australian Prime Minister Scott Morrison announced on Tuesday they the government is extending restrictions on social movements by closing food courts in shopping centres and limiting the number of people that can gather at weddings and funerals.
Although this development seems to have caused the pair to erase a small portion of its daily gains, risk-on flows in the second half of the day could help the pair extend higher especially if the US finally approves the coronavirus relief package. Finally, the US economic docket will feature the IHS Markit's preliminary Manufacturing and Services PMI reports for March.
Technical levels to watch for