AUD/USD rebounds from key support towards 0.6400 despite softer China PMI

AUD/USD grinds higher around intraday top, pares the biggest daily loss in a week.
Three-week-old ascending trend line defends buyers but 200-HMA is the key hurdle to win the fort.
Fed’s Powell propelled US dollar, Aussie trade numbers initially failed to impress AUD bulls.
Market sentiment remains dicey as traders lick post-Fed wounds ahead of US ISM Services PMI, NFP.

AUD/USD seesaws near intraday high surrounding 0.6360 despite downside China PMI data during early Thursday. The reason could be linked to the early-day releases of Aussie trade numbers and the US dollar’s consolidation of the Fed-inspired gains.

China’s Caixin Services PMI for October dropped to the lowest level in five months while flashing 48.4 figure versus 49.3 prior.

Earlier in the day, Australia’s trade surplus increased to 12,444M In September versus 8,850M expected and 8,324M prior while the Exports rallied by 7.0%, compared to 2.6% prior. However, the growth of the Imports dropped to 0.4% versus 4.5% prior.

Also challenging the Aussie pair buyers could be the escalating geopolitical tensions between North Korea and Japan join the risk-negative covid news from China to exert downside pressure on the sentiment. On the same line could be the Fed’s readiness for further rate hikes.

That said, North Korea’s firing of missiles and Japan’s warning to residents weigh on the market’s risk profile, which in turn weighs on the risk barometer pair. On the same line could be the coronavirus fears from China as the lockdown surrounding the area involving the world’s largest iPhone factory defied hopes of easing the dragon nation’s zero-covid policy. Additionally, Reuters quotes China’s latest National Health Commission figures to suggest an uptick in coronavirus cases. The news states, “China reported 3,372 new COVID-19 infections on Nov. 2, of which 581 were symptomatic and 2,791 were asymptomatic.”

However, a pullback in the US Dollar Index (DXY) from a one-week high to 111.90, mainly tracing the US Treasury yields should have defended the AUD/USD buyers. It should be noted that the US 10-year bond coupons ease to 4.096% while its two-year counterpart snaps a four-day uptrend as it drops to 4.611% at the latest.

Moving on, the US ISM Services PMI bears the downbeat forecasts of 55.5 for October compared to 56.7 previous readings and appears important for near-term AUD/USD moves. Following that, Friday’s US Nonfarm Payrolls (NFP) will be the key, mainly due to the strong ADP data.

Technical analysis

AUD/USD pair bounces off a three-week-old ascending trend line while posting the recent gains. However, the bearish MACD signals and a clear downside break of the 200-HMA keep the sellers hopeful unless the quote crosses the 0.6405 hurdle.

Even if the quote rises beyond 200-HMA, the weekly resistance line near 0.6430 could act as an extra filter to the north before welcoming the bulls.

Meanwhile, a downside break of the immediate support line, close to 0.6325 at the latest, could quickly drag the AUD/USD prices towards the late October swing low of around 0.6210.

Following that, a downward trajectory towards the previous monthly low, also the yearly bottom, surrounding 0.6170, will be in focus.