AUD/USD drops below 0.71 as DXY surges to new 2018 high on ADP data
- ADP data beats the analysts' estimate to boost the greenback.
- US Dollar Index extends rally to fresh 2018 high.
- Inflation data from Australia weighs on the AUD.
After dropping to 0.7070 area earlier in the day following the mixed inflation data from Australia, the AUD/USD recovered above 0.7100 before losing its traction on the broad-based USD strength in the early NA session. As of writing, the pair was trading at 0.7080, losing 0.35% on a daily basis.
The US Dollar Index, which stayed quiet around the 97 handle for the majority of the day, advanced to its highest level since June 2017 at 97.18 after the data released by the ADP showed that the private sector rose by 227K in September to surpass the market expectation of 218K.
Commenting on the report, "The job market bounced back strongly last month despite being hit by back-to-back hurricanes. Testimonial to the robust employment picture is the broad-based gains in jobs across industries," said Mark Zandi, chief economist of Moody’s Analytics. Additionally, the U.S. Bureau of Labor Statistics reported that employment cost index in the third quarter increased by 0.8%.
Earlier in the day, the data from Australia revealed that the annual CPI in Q3 fell to 1.9% from 2.1% recorded in Q2. Moreover, the RBA's trimmed mean CPI came in at 1.8% in the same period to fall short of the analysts' estimate of 1.9%.
Technical levels to consider
The initial support for the pair aligns at 0.7070 (daily low) ahead of 0.7045 (Oct. 29 low) and 0.7000 (psychological level). On the upside, resistances are located at 0.7100 (20-DMA), 0.7145 (50-DMA) and 0.7250 (100-DMA).