Outlook Remains Bearish

After hitting a nadir in early Europe AUD/USD recovered to post gains on the session, the rate rose from lows of 0.7495 to hit highs of 0.7564, the pair closed at 0.7554 and is flat on the session.

• Data showed composite PMI fell to 56.1 from 58.01 previously, both services and manufacturing declined from the previous month as the effect of lockdowns in Victoria took hold. Following the release IHS Markit said "Australia's private sector growth momentum further eased in June but remained at a strong level to indicate continued improvement in economic conditions during the recovery from the COVID-19 pandemic. "Renewed movement restrictions in the Victorian state and supply constraints stood out as two key reasons weighing on the growth momentum for Australia in the June flash PMI data, which is worth scrutinising. Meanwhile private sector firms were also slightly less optimistic with regards to output in the next 12 months amid the uncertain virus and supply situation."
• From a technical perspective AUD/USD outlook remains bearish following recent weakness. The pair has traded below key support at 0.7532 Apr 1 low and price has also breached the 200-dma. The move lower confirms a resumption of the reversal that occurred Feb 25 and signals scope for a deeper pullback towards 0.7462, the Dec 21, 2020 low. On the upside, initial resistance is at 0.7561, the Jun 18 high.
• Markets look ahead to a speech from RBA's Ellis an Ai Group Business lunch in Adelaide at 0415BST/1315AEST.