Australian dollar is one of the best performing G10 currencies today as all commodity currencies catch a bid. AUD held onto gains even after Chinese PMI indices for June showed the manufacturing sector remaining in contraction territory and the services sector performed worse than expected. Solid performance of AUD can be explained with changing RBA expectations - more than half of economists in Reuters poll now expect RBA to deliver a 25 bp rate hike at its meeting next week. A growing number of economists also see a chance for RBA to follow with another 25 bp rate hike at the August meeting.
EURAUD drops for the second day in a row after a break above the 1.6500 resistance zone earlier this week proved to be short-lived. Pair launched a pullback later on and tested the 1.6370 support zone this morning. However, bears failed to push the pair below and EURAUD has recovered to trade around 1.6400 at press time. The pair may become more volatile at 10:00 am BST when CPI data from the euro area is released. Should it surprise to the upside, EURAUD may extend current recovery move and distance away from the aforementioned 1.6370 support. In such a scenario, the 1.6500 resistance zone will draw attention once again.
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Source: xStation5
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