AUD/USD sheds early session gains

FXstreet.com (London) - AUD/USD has fallen against the dollar after shedding gains made overnight. The pair is currently trading at USD0.8948.

Reduced rate cut expectations

The Aussie dollar strengthened early in the session, despite further weak Chinese numbers which pushed down Asian markets.

The Australian dollar was given support by reduced bets that the Reserve Bank of Australia would move to cut its benchmark rate from an already record-low 2.5 percent.

Data released by the Australian Bureau of Statistics is expected to show that Australias trade deficit narrowed in November. Consensus expectations are for a drop from AUD529m to AUD300m.

Chinese misses

The HSBC/Markit Economics services Purchasing Managers' Index (PMI) dropped to 50.9 in December, its lowest since August 2011, from 52.5 in November. New business expansion also dropped to its slowest pace in six months.

However, the Chinese services data was not as important to demand for Australian exports as last weeks manufacturing PMIs. After adjusting for seasonal factors, the HSBC PMIs posted at 50.5 in December, unchanged from the earlier flash reading, and down slightly from 50.8 in November. The print was a three-month low, but showed a rise in output for the fifth successive month.

AUD/USD sheds gains

AUD/USD has round resistance around USD0.8950 after falling from session highs at USD0.8982. The pair is currently trading at USD0.8948, undoing early session gains - down 0.9 percent.

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AUD/USD sheds early session gains