AUD/USD extends recovery beyond 0.6760 on Wednesday

• PMI data in Australia rebound above 50 in January. 
• Upbeat market mood helps risk-sensitive AUD continue to find demand.
• US Dollar Index clings to gains above 98 after ADP data. 

The AUD/USD pair gained 40 pips on Tuesday on the back of the Reserve Bank of Australia's policy statement and continued to push higher on Wednesday. Easing concerns over the coronavirus outbreak weighing on the Chinese economic recovery seems to be helping the China-proxy AUD preserve its strength. As of writing, the pair was up 0.4% on the day at 0.6765.

Furthermore, the Commonwealth Bank Manufacturing and Services PMI both rose above the 50 threshold in January in Australia to show that the economic activity in the private sector expanded in January. Meanwhile, Reserve Bank of Australia (RBA) Governor Lowe argued that another cut to the policy rate would be a risk if they don't see progress on unemployment and inflation.

DXY stays above 98 after ADP data

On the other hand, surging US Treasury bond yields provide a boost to the greenback for the second straight day on Wednesday and limit the pair's upside for the time being.

Additionally, the data published by the ADP on Wednesday revealed that employment in the private sector increased 291K to surpass the market expectation of 156K. The US Dollar Index (DXY) was last up 0.17% on a daily basis at 98.10.

Later in the session, the IHS Markit's Services PMI and the ISM's Non-Manufacturing PMI data will be watched closely by market participants.

Technical levels to watch for