AUD/USD awaits Australia trade data around 0.6650 as China woes, hawkish Fed clues lure sellers
- AUD/USD steadies after snapping four-day uptrend, holding lower ground of late.
- China housing jitters, rush to buy Hong Kong insurance and Sino-American tussles weigh on Aussie pair due to Canberra-Beijing ties.
- Hawkish FOMC Minutes supersede mixed comments from NY Fed President Williams, softer US data.
- RBA’s hawkish halt may tease AUD/USD buyers if US ADP Employment Change, ISM Services PMI disappoint.
AUD/USD licks its wounds around mid-0.6600s amid a sluggish start to Thursday’s Asian session, after posting the first daily loss in five. In doing so, the Aussie pair portrays the cautious mood ahead of Australian trade numbers for May, as well as recently mixed catalysts surrounding the Fed. Even so, pessimism about Canberra’s biggest customer Beijing, as well as broad recession woes, keeps the risk-barometer pair depressed.
A jump in Chinese investor buying Hong Kong and Macau wealth products join pessimism about China’s top-tier housing players like Shimao Group, as well as the government-backed Sino-Ocean Group, to amplify economic fears about the world’s biggest industrial player China.
The same joins the ongoing Sino-American tension and softer China data to exert additional downside pressure on the AUD/USD price. On Wednesday, downbeat prints of China’s Caixin Services PMI for June, to 53.9 versus 57.1 prior, joined the escalating fears of the US-China tension amid fresh warnings of further trade restrictions from Beijing to weigh on the sentiment and prices of the riskier assets like AUD/USD.
That said, China’s Global Times and former Vice Commerce Minister flagged hardships for the US IT companies, as well as metal players. Earlier on Wednesday, China announced abrupt controls on exports of some gallium and germanium products, effective from August 1. The dragon nation’s latest retaliation is in reaction to the US curb on AI chips’ shipments to Beijing.
It should be noted that the Federal Open Market Committee (FOMC) Minutes for the June meeting stated that almost all members agreed to a pause in the rate hike trajectory while some policymakers showed an inclination for a July rate hike of around 0.25%. The same highlights hawkish bias at the US central bank, versus the Reserve Bank of Australia’s (RBA) pause in the rate hike, to weigh on the Aussie pair.
Even so, softer US data and fears of recession, as signaled by the US Treasury bond yields curve inversion, put a floor under the AUD/USD. That said, US Factory Orders reprints 0.3% MoM growth for May versus 0.8% expected. The official publication also mentioned that the new orders for manufactured durable goods in May rose for the third consecutive month. Earlier in the week, the US ISM Manufacturing PMI and S&P Manufacturing PMI came in softer and propelled the Gold Price.
While portraying the mood, the markets almost priced in the June Fed rate hike by 0.25% and weighed on the Gold Price while the Wall Street benchmarks closed in the red and the US Treasury bond yields joined the US Dollar Index (DXY) to rise.
Moving on, Australia’s Imports, Exports and Trade Balance for May will be the immediate catalyst to watch for the AUD/USD pair traders. Following that, the US ISM Services PMI and ADP Employment Change for June will be crucial as both of them will help determine Friday’s all-important Nonfarm Payrolls (NFP) and affect the AUD/USD prices. Above all, the risk catalysts, namely China headlines and recession woes, will be crucial to watch for clear directions.
Technical analysis
A clear U-turn from the 200-DMA, around 0.6700 by the press time, directs AUD/USD sellers toward a six-week-old rising support line, close to 0.6630 at the latest.