AUD/USD off to a shaky start on Aussie service sector employment contraction

The AUD/USD is off to a shaky start this Monday morning after the Australian Industry Group Australian Performance of Services Index showed the jobs growth contracted in May.

The currency pair clocked a session high of 0.7440 before deflating to 0.7425 levels. Friday’s high was 0.7447.

Service sector accounts for 70% of Aussie GDP

The Aussie services index fell 1.5 points in May to 51.5. The details show the employment index fell into contraction at 49.2. This is bad news for the AUD bulls, given the services are over 70% of Australian GDP.

Risk assets under pressure

Risk currencies like the AUD are under pressure following the London Bridge terror attack on Saturday late evening. GBP gapped 30 pips lower, while gold strengthened 0.10%.

Focus on China services PMI

Aussie dollar, a proxy for China, could find fresh bids if the China services PMI due at 1:45 GMT registers a faster pace of expansion in the activity in May. The data released last week showed China's factory activity contracted for the first time in 11 months.

AUD/USD Technical Levels

A break below 0.7422 (May 26 low) would open up downside towards 0.7368 (May 5 low). A daily close below the same could yield a re-test of 0.7328 (May 9 low) – 0.7300 (zero levels). On the other hand, a break above 0.7445 (10-DMA) would expose resistance at 0.7489 (50-DMA) and 0.7531 (200-DMA).

Despite Friday’s sharp rally to 0.7447, the daily RSI remains bearish below 50.00.