Australian Dollar Climbs Despite Strong US Dollar and Services Data
The Australian Dollar (AUD) edged higher against the US Dollar (USD) on Monday, gaining 0.34% and trading around 0.6970 despite persistent strength in the Greenback. The US Dollar remains supported by elevated Treasury yields and Euro (EUR) weakness, which has contributed to the USD Index (DXY) reaching its highest level in 18 months above 102.50.
In the United States, the latest services sector data showed mixed signals. The Institute for Supply Management (ISM) Services Purchasing Managers Index (PMI) slowed slightly to 54.9 in September from 55.4 in August, below market expectations but still indicating expansion. Inflationary pressures increased, with the Prices Paid Index rising to 74.0 from 72.6, while the Employment Index improved to 50.1 from 47.8. The S&P Global Services PMI was revised higher to 58.8 in September, suggesting continued economic momentum.
The Euro came under pressure due to concerns over French debt, with the spread between French and German 10-year government bond yields widening to around 150 basis points, the highest level since 2011. US Treasury yields also remained elevated, with the benchmark 10-year yield holding around 5.30%, close to its recent peak of 5.34%.
Technically, AUD/USD is trading at 0.6968, holding a mildly bullish near-term bias as it sits above the 100-period simple moving average (SMA) at 0.6953. Initial resistance is seen at 0.6980 and the 200-period SMA at 0.6988, with further bullish clearance needed toward 0.7005 and 0.7045 before the 0.7075-0.7105 band and 0.7140 come into view. Immediate support is at 0.6955 and the 100-period SMA at 0.6953, with deeper floors aligning at 0.6907 and 0.6883.