AUD/USD drops back towards 0.7500 on mixed China PMI data, coronavirus pessimism
- AUD/USD consolidates losses from weekly low, snaps two-day downtrend.
- China NBS Manufacturing PMI, Non-Manufacturing PMI crossed market forecasts but remain below previous readouts.
- Risk appetite improves even as Queensland Health Officer opposes AstraZeneca usage, Fed’s Waller sounds hawkish.
- US ADP Employment Change will be the key data, covid updates are important as well.
AUD/USD extends pullback from intraday high to 0.7515, up 0.06% on a day, following China’s official PMI data release on early Wednesday. Even if the activity numbers refrained from any major disappointments, coronavirus (COVID-19) conditions in Australia could be blamed for the pair’s latest weakness. That said, the quote dropped to the weekly low the previous day after the covid variant spread pushed Aussie authorities to announce lockdowns affecting near 80% of the population.
China’s NBS Manufacturing PMI rose past 50.8 forecast to 50.9 but lagged behind the 51.00 prior. On the same line, Non-Manufacturing PMI also stayed below 55.2 prior despite crossing 52.7 market consensus with 53.5 readings for June.
Read: Chinese PMIs beat estimates but are below priors
Numbers stating the fact that nearly 4.0% of Australians are fully vaccinated keep AUD/USD traders on toes after the Oz nation registered over 100 cases in recent days.
Although slower inoculations risk a wider spread of the covid strain, Queensland Chief Health Officer Jeanette Young recently turned down the usage of AstraZeneca jabs for under the 40s by citing the blood clotting issues. Authorities from New South Wales (NSW) and Victoria also spoke while citing recent cases as linked to the previous infections.
Elsewhere, comments from the Fed Governor Christopher Waller also probed the risk appetite as the policymaker backed tapering concerns. Fed’s Waller said, in a Bloomberg TV interview, “Inflation expectations seem anchored,” while also signaling that inflation may remain above the Fed’s target for the next few moves.
Amid these plays, S&P 500 Futures remain mildly bid whereas the US 10-year Treasury yields remain lackluster by the press time.
Having witnessed the initial market reaction to the activity data from Australia’s key customer China, AUD/USD traders should keep their eyes on the covid updates ahead of the US ADP Employment Change for June, expected 600K versus 978K prior for fresh impulse.
Technical analysis
Despite the recent corrective pullback, AUD/USD remains below the 200-day SMA level of 0.7565, keeps bears hopeful while aiming at the yearly low of 0.7477 amid downbeat MACD. Alternatively, the 0.7600 threshold and early June lows near 0.7645 act as the extra upside filters beyond the key SMA.