The AUDUSD falls to 0.6680 on the back of disappointing China data. Shattering a four-day advance in the early hours of Wednesday. In doing so, the Aussie pair justifies sentiment challenges posed by US-China tensions and recession worries.
China’s Yuan defense and lower US data join the RBA’s hawkish pause to entice Aussie bulls.
The Caixin Services PMI in China fell to 53.9 in June from 57.1 the previous month. Earlier this week, China’s Caixin Manufacturing PMI fell to 50.5 for the month. Compared to 50.9 in the previous month and 50.2 in the market prediction. It should be noted that the official PMIs for the Dragon nation. June appears less stunning, keeping the AUDUSD bears hopeful.
Aside from the worse China statistics, concerns about the US economy. And the Sino-American trade conflict put downward pressure on the AUDUSD market.
It should be mentioned that US two-year Treasury bond yields fell to 4.85% and 10-year Treasury bond yields dipped to 3.78% before closing Monday’s trade at 4.93% and 3.86%, respectively. According to Reuters, the yield curve momentarily inverted to 42-year lows Monday as investors increasingly expect the Fed to hike its benchmark borrowing rates to keep inflation under control.
Nonetheless, China placed unexpected curbs on some gallium and germanium exports beginning August 1. The latest reprisal by the dragon kingdom is in response to the US ban on AI chip shipments to Beijing.
Alternatively, weaker US data and the People’s Bank of China’s (PBOC) support of the offshore Yuan (CNY) place a floor under the AUDUSD price. The news about the Reserve Bank of Australia’s (RBA) hawkish stop could be along the same lines. Furthermore, Acting Treasurer Katy Gallagher’s dismissal of Australia’s recession troubles poses a challenge to Aussie pair sellers.
Among these bets, the S&P500 Futures print minor losses, but US 10-year and two-year Treasury bond rates remain essentially steady at 3.85% and 4.90%, respectively, by press time.
Looking ahead, the Federal Open Market Committee (FOMC) Minutes for the June meeting will be released. It is critical for AUDUSD traders to keep an eye out for obvious directions. Having said that, the Fed policymakers announced a halt in rate hikes during the June meeting, but Chairman Jerome Powell signaled “two more rate hikes in 2023” afterward, which keeps the pair sellers hopeful.
AUDUSD Technical Outlook
A clear upside break of the prior resistance line, now support near 0.6585, keeps AUDUSD buyers optimistic, even if the 200-day moving average pushes the bulls around the 0.6700 level.
