AUD/USD remains on the defensive after Chinese PMIs, holds just above 0.6600 mark

• AUD/USD edges lower on Friday and hangs near a multi-week low touched the previous day.
• The Fed’s hawkish outlook continues to underpin the USD and acts as a headwind for the pair.
• The mixed Chinese PMIs fail to impress bullish traders or provide any meaningful impetus.
• Traders also seem reluctant to place aggressive bets ahead of the US Core PCE Price Index.

The AUD/USD pair struggles to capitalize on the previous day's modest gains and meets with some supply during the Asian session on Friday. Spot prices remain on the defensive around the 0.6600 mark, just above a nearly four-week low touched on Thursday and move little in reaction to the mixed Chinese macro data.

In fact, the official Chinese Manufacturing PMI remained in contraction territory for the third straight month and improves slightly to 49 for June, from 48.8 in the previous month. Meanwhile, the gauge for the services sector surpassed consensus estimates and came in at 53.2 for the reported month, though was lower than the 54.5 in May. The data does little to ease concerns about the worsening global economic outlook, which, along with concerns about deteriorating US-China relations, act as a headwind for the risk-sensitive Aussie.

Apart from this, expectations that the Reserve Bank of Australia (RBA) will refrain from hiking interest rates in July, bolstered by the fact that domestic consumer inflation slowed to a 13-month low in May, exert some pressure on the AUD/USD pair. The US Dollar (USD), on the other hand, stands tall near its highest level since June 13 and continues to draw support from the Federal Reserve's (Fed) hawkish outlook. Moreover, the upbeat US economic data released on Thursday reaffirmed bets for another 25 bps lift-off at the July FOMC policy meeting.

This, in turn, remains supportive of elevated US Treasury bond yields and acts as a tailwind for the USD. Traders, however, seem reluctant to place aggressive bets and prefer to wait on the sidelines ahead of the release of the US Core PCE Price Index - the Fed's preferred inflation gauge. The crucial data is due later during the early North American session and will influence expectations about the future rate-hike path. This, in turn, will drive the USD demand in the near term and provide a fresh directional impetus to the AUD/USD pair.

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