AUD/USD extends gains to test 0.7830 on China Caixin PMI

• Rally in commodities, weaker DXY underpin.
• China Caixin PMI solid.
• Breaks through 0.7825 – key resistance.

The bulls remain unstoppable, taking the AUD/USD pair finally through the stiff resistance located at 0.7825 levels on the release of better-than-expected Chinese Caixin manufacturing PMI data.

AUD/USD starts New Year in good cheer

The Aussie set-off the New Year on a positive note, extending its bullish momentum from the last year, as the recent rally seen in oil and gold prices continue to buoy the sentiment around the resource-linked AUD. It’s worth noting that oil marked the highest January opening price since 2014.

Moreover, persistent broad-based US dollar weakness combined with a solid improvement seen in the Chinese manufacturing sector activity report, as published by Caixin, also added to the AUD/USD rally. China's Caixin Manufacturing PMI hits 4-month highs in December

Meanwhile, markets ignored downbeat Australia’s AIG manufacturing index and the latest North Korea news, as a better risk sentiment remains supportive of the higher-yielding Aussie.

In the day ahead, light trading is expected to continue ahead of the US final manufacturing PMI report.

AUD/USD Technicals

Valeria Bednarik, Chief Analyst at FXStreet noted: “Shorter term, and according to the 4 hours chart, the upside is also favored, as technical indicators barely corrected extreme overbought conditions before turning flat well above their midlines, while the 20 SMA maintains a strong upward slope below the current level. Support levels: 0.7790 0.7745 0.7710. Resistance levels: 0.7825 0.7860 0.7895.”