AUD/USD sellers dominate below 0.6800 on mixed China/Aussie data, RBA eyed

• AUD/USD holds lower grounds near the lowest levels in seven weeks, reverses Friday’s gains.
• Mixed prints of the second-tier data from Australia/China, challenges to sentiment exert downside pressure.
• Holidays in the US, Canada restrict momentum ahead of the RBA, Aussie GDP.

AUD/USD takes offers to refresh intraday low near 0.6780 as bears reverse the previous day’s corrective move amid challenges to risk appetite. Also weighing the risk barometer pair are the recently flashed statistics from Australia and its biggest customer China. It should, however, be noted that a Labor Day holiday in the US and Canada restricts the market’s movement despite multiple risk-negative catalysts.

China’s Caixin Services PMI dropped to 55.0 in August, versus 55.5 in prior readings. In doing so, the private activity gauge traced the major PMIs from the dragon nation that recently signaled pessimism for the world’s largest industrial player.

At home, the AiG Performance of Construction Index and S&P Global Services PMI for August improved in August while TD Securities Inflation dropped to -0.5% during the stated monthly, versus 1.2% prior. Further, Australia’s ANZ Job Advertisements improved to 2.0% compared to -1.1% prior whereas the Company Gross Operating Profits for the second quarter (Q2) rose past 4.0% market forecast to 7.0%, compared to 10.2% previous readings.

Elsewhere, S&P 500 Futures print mild gains while the US holiday limits the moves of the US Treasury yields. Even so, risk-negative catalysts exert downside pressure on the AUD/USD prices.

The Group of Seven (G7) nations agreed on capping the price of Russian oil in the international markets. Following that, Moscow halted energy supplies to the European Union (EU) through Nord Stream 1 pipeline, citing a ‘leak’, during the weekend. It’s worth noting, however, that Politico ran a story mentioning that Russia’s Gazprom said on Saturday it would increase its shipments of gas to Europe via Ukraine, citing media reports. In addition to the Russia-linked energy problems and a likely recession due to the same, a halt in the US-Iran nuclear talks also amplifies oil woes for the old continent, as well as for the globe. “Iran nuclear talks stall again after latest response from Tehran,” said Bloomberg.

On a different page, US President Joe Biden’s administration poured cold water on the face of expectations that the US may ease/remove the Trump-era tariffs on China. “The Biden administration will allow Trump-era tariffs on hundreds of billions of dollars of Chinese merchandise imports to continue while it reviews the need for the duties,” said Bloomberg.

Talking about the data, US employment data marked mixed readings as the headline Nonfarm Payrolls (NFP) rose past 300K forecast to 315K, versus 526K prior, but the Unemployment Rate rose to 3.7% compared to 3.5% expected and prior. Further details reveal that the Average Hourly Earnings reprinted 5.2% growth for August, a bit lesser than the 5.3% market consensus. Also, Factory Orders dropped to -1.0% for July compared to 0.2% forecasts and 1.8% in previous readings.

Looking forward, the US data may restrict the market moves but the traders’ preparations for this week’s Reserve Bank of Australia (RBA) monetary policy verdict and Australia’s Q2 Gross Domestic Product (GDP) will be important to observe. Given the recent challenges for the Pacific economy, mainly emanating from China, the RBA may choose a cautious path and can disappoint AUD/USD bulls. That said, the Aussie central bank is expected to unveil 0.50% rate hike.

Technical analysis

The AUD/USD pair’s failure to cross the monthly support-turned-resistance line, near 0.6845 by the press time, during Friday’s rebound hints at the quote’s further downside targeting the yearly low of around 0.6680.