Australian Dollar gains ground on Australian PMI data, modestly softer US Dollar

• The Australian Dollar holds positive ground on Thursday. 
• The Aussie edges higher as Australian PMI reading has maintained expansion in June. 
• Investors await the advanced US S&P Global PMI data, which is due on Friday.

The Australian Dollar (AUD) trades with mild gains in Thursday’s Asian session. The Aussie edges higher after the recent Australian Judo Bank PMI report suggested that business activity is still growing despite a slower pace than in March and April. Furthermore, the Reserve Bank of Australia’s (RBA) hawkish hold on Tuesday is likely to underpin the AUD in the near term. 

However, the escalating geopolitical tensions in the Middle East after Israeli officials reiterated that the country is ready for an all-out war against Hezbollah, might boost safe-haven currencies like the US Dollar (USD). The advanced US S&P Global Manufacturing and Services PMI will take center stage on Friday. If the US business activity showed an improvement in June, this could further support the Greenback and act as a headwind for the pair. 

Daily Digest Market Movers: Australian Dollar remains st after the country’s PMI data

• Advanced Australia’s Judo Bank Composite PMI declined in June to 50.6 from 52.1 in May. The Manufacturing PMI dropped to 47.5 in June from 49.7 in the previous reading, weaker than the 50.6 expected. The Services PMI fell to a five-month low of 51.0 in June compared to 51.2 prior, according to the Judo Bank and S&P Global. 
• US Initial Jobless Claims for the week ending June 15 rose by 238K, compared to the previous reading of 243K, above the market consensus of 235K. 
• US Building Permits dropped by 3.6% MoM in May from 1.44 million to 1.386 million, while Housing Starts for the same period fell by 5.5% from 1.352 million to 1.277 million.
• Richmond Fed President Tom Barkin said on Thursday that the central bank is well-positioned with necessary firepower for job, but will have to maintain a strict data-dependent approach before considering cutting rates. 
• Minneapolis Fed President Neel Kashkari noted that it could take one to two years for inflation to return to the Fed’s 2% target, per Reuters.

Technical Analysis: AUD/USD’s constructive bias remains in place

The Australian Dollar trades on a stronger note on the day. The AUD/USD pair has remained stuck within a descending trend channel since May 14. The pair maintains a positive outlook beyond the 100-day Exponential Moving Average (EMA) on the daily chart. The 14-day Relative Strength Index (RSI) continues to show bullish momentum, suggesting resistance is more likely to hold than to break. 

A decisive break above 0.6675 (the upper boundary of the descending trend channel) could send the pair up to the 0.6700 round mark en route to  0.6760 (high of January 4). 

In the bearish case, the key contention level for AUD/USD is seen at 0.6592 (100-day EMA) A breach of the mentioned level will see more loss to 0.6565 (the lower limit of the channel). The additional downside filter to watch is 0.6510, a low of March 22, followed by 0.6465, a low of May 1.