AUD/USD struggles to find direction, continues to trade around 0.6850
- Lack of macroeconomic data releases causes markets to stay calm on Wednesday.
- US Dollar Index looks to end the day flat near 97.50.
- Coming up: Manufacturing and Services PMI data from Australia.
After posting small daily losses on Tuesday, the AUD/USD pair struggled to make a decisive move in either direction on Wednesday and looks to close the day near the 0.6850 handle.
The lack of major developments surrounding the United States (US)-China trade conflict and significant macroeconomic data releases on Wednesday is forcing major currency pairs to stay in a consolidation phase.
Eyes on PMI reports
In the early trading hours of the Asian session on Thursday, the Commonwealth Bank of Australia and Markit Economics will be publishing the preliminary Manufacturing and Services Purchasing Managers' Index (PMI) reports. Markets expect the Manufacturing PMI to fall to 49 in October from 50.3 in September to reveal contraction in the sector's economic activity.
Lower-than-expected PMI figures could put the AUD under selling pressure as it's likely to be seen as a factor that would force the Reserve Bank of Australia (RBA) to preserve its dovish policy outlook.
On the other hand, the US Dollar Index, which registered modest recovery gains on Tuesday, looks to finish the day virtually unchanged on Wednesday. Markit Manufacturing and Services PMI data, durable good orders, and new home sales data from the US on Thursday could cause volatility to heighten in the second half of the day.
Technical levels to watch for