AUD/USD DROPS BELOW 0.7100 ON MODEST USD RECOVERY

AUD/USD drops below 0.7100 on modest USD recovery

23 July 2020, 16:22

• AUD/USD pair is staying under bearish pressure on Thursday.
• US Dollar Index is posting modest daily gains above 95.00. 
• Weekly Jobless Claims in the US came in higher than expected.

After spending the first half of the day in a relatively tight range near 0.7150, the AUD/USD pair lost its traction and dropped to a daily low of 0.7090 in the early American session. As of writing, the pair was down 0.45% on a daily basis at 0.7105.

DXY rebounds modestly

The weekly data published by the US Department of Labor on Thursday revealed that 1.41 million Americans applied for unemployment benefits last week. This reading came in worse than the market expectation of 1.3 million. Moreover, US Treasury Secretary Mnuchin told CNBC that a payroll tax cut won't be included in the next coronavirus relief bill. The disappointing data and Mnuchin's comment weighed on the market sentiment. With US stock index futures paring early gains ahead of the opening bell, the greenback gathered strength against its rivals. At the moment, the US Dollar Index (DXY) is up 0.14% on the day at 95.10. Later in the session, the Federal Reserve Bank of Kansas will publish its Manufacturing Activity report. However, investors are likely to remain focused on Wall Street and a sharp drop in major US equity indexes could provide an additional boost to the USD: On Friday, the Commonwealth Bank's preliminary Manufacturing and Services PMI data will be featured in the Australian economic docket.

Technical levels to watch for