AUD/USD defends 0.7500 on surprise uptick in China Caixin Manufacturing PMI

• AUD/USD bounces off intraday low to consolidate Friday's losses.
• China Caixin Manufacturing PMI part ways from official NBS PMI to rise to 50.6 in October.
• Australia eases international border restrictions for the first time in nearly 18 months.
• US ISM Manufacturing PMI, risk catalysts eyed ahead of Tuesday’s RBA.

AUD/USD remains on the back foot around 0.7515, despite recently picking up bids from the intraday low of 0.7504 on China Caixin PMI during early Monday. In doing so, the Aussie pair licks Friday's wounds amid mixed clues and cautious sentiment ahead of tomorrow’s RBA.

China’s Caixin Manufacturing PMI rose past 50.00 expected and previous readouts to 50.6 in October. The figures differ from the official NBS data released over the weekend. The headline NBS Manufacturing unexpectedly dropped to 49.2 in October from 49.6 booked in September, versus 49.7 forecast. Further, the Non-Manufacturing PMI fell to 52.4 in the reported month from September’s reading of 53.2 and against the expectations of 52.9.

Earlier in the day, Australia’s Commonwealth Bank Manufacturing PMI for October grew past 57.3 forecast and market consensus to 58.2. Also on the positive side was the ANZ Job Advertisements for October, 6.2% versus -2.8% prior. It should be noted, however, that September’s housing figures from Australia came in downbeat and favored sellers, backed by the firmer US Treasury yields.

In addition to the mixed data, Australia’s easing of international border restrictions for the first time in pandemic also should have favored the AUD/USD prices. “In one of the world's toughest responses to the coronavirus pandemic, Australia slammed its international border shut 18 months ago, barring foreign tourists and banning citizens from either exiting or arriving unless granted an exemption,” said Reuters.

Alternatively, firmer US Treasury yields keep exerting downside pressure on the Aussie pair. Steady prints of the Fed’s preferred inflation gauge joined optimism concerning the US stimulus to propel the US Dollar Index (DXY) the most since mid-June on Friday, weighing on the AUD/USD prices in turn. That said, the US Core PCE Inflation data remained firmer around 3.6%, versus a 3.7% market forecast, for September.

The same bolstered traders’ fears over the US inflation and Fed tapering chatters, as could also be sensed in the latest speech from Fed Chairman Jerome Powell, on October 22, where he dumped ‘transitory’ concern for inflation.

Also favoring the US dollar is the recent US-China tussles as the US joins hands with the European Union (EU) over steel and aluminum tariffs to challenge Beijing’s steel industry.

Against this backdrop, the US 10-year Treasury yields rise two basis points (bps) to 1.575% whereas S&P 500 Futures print 0.20% intraday gain by the press time.

Moving on, cautious sentiment ahead of tomorrow’s Reserve Bank of Australia (RBA) monetary policy meeting can test the AUD/USD moves. However, US ISM Manufacturing PMI, expected 60.4 versus 61.1, may entertain AUD/USD traders. Also important will be the updates concerning China and inflation.

Technical analysis

AUD/USD fades Friday’s bounce off a convergence of a two-week-long support line and 50-SMA amid bearish MACD signals. Also keeping sellers hopeful of breaking the 0.7500 support confluence is the bear’s gradual tightening of the grips, as portrayed by the pair’s late October moves compared to MACD and signal lines’ behavior.

Read: AUD/USD Price Analysis: Retreats towards 0.7500 key support