AUD/USD seeks support around 0.6800 ahead of Caixin Manufacturing PMI

• AUD/USD is looking for an immediate cushion around 0.6800 ahead of Caixin Manufacturing PMI data.
• After scrutiny of the Chinese official PMI and consensus, Caixin Manufacturing PMI is likely to remain downbeat.
• This week, the spotlight will remain on the release of the FOMC minutes.

The AUD/USD pair is looking for demand after dropping to near the round-level support of 0.6800 in the early Asian session. The Aussie asset is displaying some volatility after the release of the S&P Global Manufacturing PMI data. The economic data has dropped to 50.2 vs. the consensus and the prior release of 50.4.

The US Dollar Index (DXY) has yet to return to active mode after the long-truncated week. However, Friday’s action is telling a detailed story. After a consolidation for 15 trading sessions, the USD Index delivered a downside break of the consolidation formed in a range of 103.46-104.57. Carry-forwarded price action on Tuesday might bring more pain to the US Dollar.

Going forward, the Australian Dollar is likely to display sheer volatility due to the release of the Caixin Manufacturing PMI data. The expression from consensus indicates a decline in the Manufacturing PMI to 48.8 vs. the former release of 49.4. Also, the observation from the reading of official Chinese Manufacturing PMI data indicates a decline in the extent of manufacturing activities. Official China’s Manufacturing PMI data dropped to 47.0 vs. the expectations of 49.2 and the former release of 48.0.

A decline in the extent of Manufacturing PMI in China could be the outcome of a spike in Covid-19 cases after reopening measures taken by the Chinese administration to put the economy back on track. It is worth noting that Australia is a leading trading partner of China and a higher-than-anticipated PMI might support the Australian Dollar.

On the United States front, investors will keep an eye on the release of Thursday’s Federal Open Market Committee (FOMC) minutes. The minutes from December’s monetary policy by the Federal Reserve (Fed) will provide a detailed explanation behind hiking interest rates by 50 basis points (bps).