AUD/USD ignores China official PMIs around 0.7200, keeps rebound from monthly low

• AUD/USD remains firmer around intraday top following the downbeat China official PMI data for August.
• Risk appetite improves amid mixed catalysts comprising vaccine optimism, hopes of US stimulus, debt ceiling announcement.
• Fed tapering, Evergrande and a jump in the covid infections at home weigh on the quote.
• Risk catalysts are the key, China Caixin PMI will be watched for confirmation of the latest activity numbers.

AUD/USD pays a little heed to China’s first factory activity contraction since February 2020 while staying around the intraday top of 0.7200, up 0.24% on a day, during early Thursday. In doing so, the Aussie pair takes clues from the market’s mildly positive sentiment despite indecision over the key issues.

China’s NBS Manufacturing PMI dropped to 49.6 versus 50.1 forecast for August. On the contrary, Non-Manufacturing PMI rose past 47.5 prior and 52.7 expected to 53.2.

Read: Chinese Factory activity contracts first time since Feb 2020, AUD steady

Other than the mixed data, cautious sentiment in the markets ahead of the expiry of the US debt ceiling and covid vaccine news seems to challenge the previous risk-off mood, helping the AUD/USD prices to stabilize.

That said, News of AstraZeneca’s covid vaccine showing 74% efficacy in the large US trial seems to have underpinned the latest hopes of overcoming the Delta covid crisis. However, a jump in Aussie virus infections in Victoria, refreshing record top, challenges the bulls.

Furthermore, fears that China’s power cut issues will join the Evergrande saga to drown the world’s second-largest economy back towards the pandemic-era economic performance join the Fed tapering concerns to keep the pair buyers on stand-by.

While portraying the mood, the US 10-year Treasury yields print 2.5 basis points (bps) of a fall to 1.51%, extending pullback from a six-month high flashed the previous day. However, the S&P 500 Futures rise 0.30% intraday to keep Wednesday’s rebound from a weekly low.

That said, AUD/USD traders may wait for Caixin Manufacturing PMI before confirming the latest recovery moves. However, US House Speaker Nancy Pelosi is hopeful of a solution and President Joe Biden also turned down his official travel plans to solve the critical issue on hand, which in turn keep investors hopeful ahead of the decision day and may help the pair to stay firmer.

Though, headlines concerning Evergrande and the US data will be important to watch for fresh impulse.

Technical analysis

Unless crossing monthly horizontal resistance near 0.7220, also the upward sloping trend line from August 20 near 0.7250, AUD/USD remains directed towards the yearly low surrounding 0.7105.