AUD/USD registers small daily losses near 0.6860 after upbeat US ADP data

• Private sector employment in US increased more than expected in December.
• US Dollar Index extends recovery beyond 97.20 mark.
• Building Permits in Australia rose sharply in November.

The AUD/USD rose above the 0.6880 mark during the Asian trading hours but struggled to push higher as the greenback started to gather strength in the second half of the day. As of writing, the pair was down 0.03% on a daily basis at 0.6865.

USD strength weighs on AUD/USD

Reports of Iran attacking US military bases in Iraq triggered a sharp drop in the Treasury bond yields and weighed on the greenback. However, easing worries over further escalation of the conflict amid reports revealing that there were no casualties in those attacks allowed the USD to recover alongside the T-bond yields.

Furthermore, the ADP's monthly report showed that the Private Sector Employment Change in December came in at +202,000 to beat the market expectation of 160,000 and provided an additional boost to the USD. As of writing, the US Dollar Index, which touched a fresh 12-day high of 97.23, is up 0.2% on the day at 97.16.

Meanwhile, the data published by the Australian Bureau of Statistics on Wednesday showed Building Permits rose by 11.8% in November following October's decline of 7.9%. Commenting on the underlying details of this report, "non-residential approvals are trending down," said ANZ analysts. "The value of non-residential approvals declined sharply in November (-20.7% m/m) and annual growth in non-residential approvals is now at its third-lowest result in the last three years.”

On Thursday, Trade Balance data from Australia and Consumer Price Index data from China will be looked upon for fresh impetus.

Technical levels to watch for