AUD/USD clings to mild gains near 0.6700 as China announces new Covid policy

• AUD/USD picks up bids to print the first daily positive in four.
• Downbeat China trade numbers, softer-than-expected Aussie GDP fail to convince bears amid pre-Fed blackout.
• Beijing announces new COVID-19 prevention and control guidelines.
• Light calendar emphasizes risk catalysts for fresh impulse.

AUD/USD prints mild gains around 0.6700 as buyers struggle to defend the first daily gains in four heading into Wednesday’s European session.

The Aussie pair’s latest gains could be linked to the recently released Covid guidelines from China. That said, China’s National Health Commission (NHC) mentioned that asymptomatic patients, cases with mild symptoms can undergo home quarantine. The updates also mentioned, “High-risk zones with no new infections for 5 straight days should be released from lockdown in a timely manner.”

On the contrary, fears of global recession, as conveyed by the key representatives of major banks and Bloomberg economics seem to challenge the AUD/USD bulls. Additionally, softer-than-expected Australia Gross Domestic Product (GDP) for the third quarter (Q3) and downbeat prints of China’s November monthly trade data also weighed on the AUD/USD prices.

However, hopes of overcoming China-linked virus fears and faster economic transition, due to the NHC guidelines, seem to have triggered the latest risk-on mood, which in turn favors AUD/USD bulls.

Amid these plays, the S&P 500 Futures print mild gains while the US 10-year Treasury yields print mild gains near 3.55%.

Moving on, China’s risk-positive announcements and second-tier data may entertain AUD/USD traders ahead of Thursday’s China inflation numbers and Friday’s preliminary readings of the US Michigan Consumer Sentiment Index.

Technical analysis

Tuesday’s Doji candlestick above the 21-DMA, around 0.6700 by the press time, keeps AUD/USD buyers hopeful.