THE TAKEAWAY:Chinese services industry shows decline in June versus prior, but remains above the 50 expansion level > More Australia Data to come > AUD/USD Rises
The Australian Dollar traded higher against the US Dollar despite the Chinese services industry showing signs of slowing down. China’s Non-Manufacturing PMI in June declined narrowly to 53.9 from 54.3 but remained above the expansionary mark of 50.
As the world’s second largest economy, this slowdown of the services industry in China together with last week’s declined manufacturing industry, could weigh negatively on Chinese GDP growth expectations and thus on risk sentiment. Because the AUD is supported by relatively high interest rates that attract yield-seeking investors, a risk-aversion scenario could see unwinding of carry trade that could move AUD/USD lower.
However, upcoming Australia and U.S. data could impact risk sentiment. Australia trade balance and retail sales data due at 1:30 GMT and US employment and services data in the coming hours could be movers of the pair.
AUD/USD (5-Minute Chart)
Source: FXCM Marketscope
--Jimmy Yang, DailyFX Research Team