AUD/USD dribbles around mid-0.7000s on mixed PMIs, focus on RBA, Fed

• AUD/USD licks its wounds at two-month low, snaps two-day downtrend amid a sluggish Asian session.
• Aussie PMIs came in upbeat for April but Chinese activities contract amid covid resurgence.
• RBA, Fed both are up for rate hikes but the pace of normalization will be the key to watch.
• US ISM Manufacturing PMI will entertain intraday traders, NFP is also important for clear directions.

AUD/USD consolidates recent losses around the multi-day bottom near 0.7050 during the quiet Asian session on Monday. The pair’s latest rebound could be linked to the upbeat PMI data for April at home, as well as mildly bid US stock futures. However, anxiety ahead of this week’s monetary policy meetings by the Fed and the Reserve Bank of Australia (RBA), as well as China’s covid woes, keep the bears hopeful.

Australia’s AiG Performance of Mfg Index for April grew past 55.7 to 58.5 while the Markit Manufacturing PMI also crossed the 57.7 figure flashed in March to 58.8 in April. However, China’s PMIs for April came in softer than expected and prior, with the headline NBS Manufacturing PMI declining to 47.4 versus 48 forecast and 49.5 previous reading.

That said, the S&P 500 Futures rise 0.33% by the press time even as Wall Street closed with heavy losses on Friday. The market’s latest moves could be linked to the recently easing expectations that the Fed would go all-in to normalize the balance sheet while also announcing a 0.50% rate hike.

At home, the RBA is likely to announce a 0.15% increase to the benchmark rate on Tuesday. However, the policymakers’ view for the next moves, vis-à-vis the Fed action, will be crucial to watch as well.

Other than the central banks, worsening virus conditions in China, amid the holiday mood, join the Ukraine-Russia crisis to exert downside pressure on the AUD/USD prices.

That being said, the US US ISM Manufacturing PMI for April, expected 58.0 versus 57.1 prior, will direct short-term AUD/USD moves ahead of the key RBA and the Fed. Also important will be Friday’s US Nonfarm Payrolls (NFP).

Technical analysis

Unless providing a daily close beyond the August 2021 bottom of 0.7105, AUD/USD prices remain directed towards the yearly low of 0.6966.