AUD/USD stays depressed below 0.7200 amid mixed China PMI, firmer USD

• AUD/USD takes offers to refresh intraday low, snaps three-day uptrend around the highest levels since May 05.
• China’s official NBS Manufacturing PMI meet consensus, Non-Manufacturing PMI eased in May.
• Risk appetite remains firm but yields underpin USD rebound during full markets.
• Second-tier US data, risk catalysts eyed ahead of Wednesday’s Aussie GDP, Friday’s US NFP.

AUD/USD struggles to rebound from intraday low around 0.7160, snapping a three-day uptrend near the monthly top, as Aussie traders check activity numbers from China and housing data at home during early Tuesday. In doing so, the Aussie pair snaps a three-day run-up while easing from the highest levels since early May on a daily basis.

China’s official activity numbers marked contraction for May as the headline NBS Manufacturing PMI matched 49.6 forecasts, versus 47.4 expected, while the Non-Manufacturing eased to 47.8, below 50.7 market consensus.

Additionally, Australia’s Building Permits for April shrank to -2.4% compared to 2.0% expected growth and -18.5% in previous readings.

Other than the downbeat data from Australia’s biggest customer, as well as softer housing numbers at home, the market’s mixed sentiment and the US dollar rebound also allow the AUD/USD traders to consolidate recent gains.

Market optimism fades during early Tuesday as bond buyers take a breather, underpinning a pullback in riskier assets like equities and commodities. Also challenging the previous risk-on mood were headlines from Europe, as well as month-end consolidation. While portraying the mood, S&P 500 Futures take a U-turn from a three-week top, flashed the previous day, to retest the 4,155 level. Further, the US 10-year Treasury yields rise 8.5 basis points (bps) to 2.835% by the press time.

Given the US recovery and a shift in the market sentiment, not to forget downbeat data from China and Australia, AUD/USD prices are likely to witness further downside. However, risk catalysts and second-tier US activity numbers for May should be watched carefully for clear directions.

Technical analysis

AUD/USD pullback remains elusive until staying beyond a 13-day-old support line, near 0.7135 by the press time. Recovery moves, however, need to refresh the monthly high, around 0.7270 at the latest, to please buyers.