AUD/USD, capped below 0.6325 after dropping from 0.6410

• The aussie's recovery attempts from 0.6275 remains capped below 0.6325.
• Concerns about China's zero-COVID policy are hurting the AUD.
• The RBA pointed out to a slower monetary tightening path.

The Australian dollar has given away on Monday most of the ground taken last Friday. The pair’s retreat from the 0.6410 high found support at 0.6275 although the ensuing recovery attempts remain limited below 0.6325 so far.

Concerns about China hit the aussie

The confirmation of Chinese President Xi Jinping’s third term in power has hit risk appetite, sending the offshore yuan and Asian markets lower on Monday, with investors concerned that his commitment to the zero-COVID policy may damage economic growth.

The upbeat Chinese data, with the third quarter GDP expanding beyond expectations, has failed to lift spirits.

Beyond that, the dovish message send by the Reserve Bank of Australia last month, suggesting that they might slow their monetary tightening path is acting as a headwind for the Aussie, which has depreciated about 1.25% so far today day.

In the US, macroeconomic data has also been mixed. The Chicago Fed National Activity Index ticked up 0.1% against the 0.4% decline forecasted by the analysts, while the S&P PMI showed that economic activity in both, services and manufacturing sectors contracted beyond expectations in October.

Technical levels to watch