Australian Dollar stalls below 0.7170, halfway through last two weeks’ range

• AUD/USD recovery from 0.7120 lows meets resistance at 0.7170.
• Data released on Wednesday shows that Australia's trade surplus narrowed in July.
• In the US, ADP Employment data disappointed, and Fed Williams advocated for a "wait and see" approach on rates.

The Australian Dollar (AUD) edges down against the US Dollar (USD) on Thursday, following a narrowing trade surplus in Australia and fairly positive PMI data from China, a key trading partner. The AUD/USD trades at 0.7160 after Wednesday’s rebound from lows near 0.7120 was capped at the 0.7170 area, halfway through the last two weeks' trading range.

Traders are reluctant to bet against the US Dollar following hawkish comments from the Federal Reserve’s Chairman, Kevin Warsh, at the Jackson Hole summit last week, which boosted expectations that the central bank will hike interest rates at its September 16 meeting.

Strategists at Scotiabank observe that markets are now pricing “a 70% chance of the Fed raising rates 25bps later this month,” reinforcing the Dollar’s support amid the risk-off tone.

Australian Trade surplus narrows

In Australia, Trade Balance data released earlier on the day by the Australian Bureau of Statistics revealed that the surplus narrowed by 418 million in July to 1.923 million. Exports declined 3.3% following a 9.1% jump in June, offsetting a 2.5% drop in imports that follows a 0.7% decline in the previous month.

A few minutes later, China's RantingDog Services Purchasing Managers Index (PMI) report showed stronger-than-expected business activity, with the Index rising to 51.4 in August from 50.4 in July, as stronger domestic demand helped businesses to create more jobs for the fourth consecutive month. The data, however, failed to provide any significant impulse to the China-proxy AUD.

In the US, ADP figures released on Wednesday showed a 38K increase in net private employment in August, the weakest reading in the last seven months. Apart from that, New York Federal Reserve President John Williams said that rising bond yields are due to a solid economy, rather than to inflation fears, and suggested that the central bank should “wait and see” before taking decisions on interest rates.