AUDUSD slides towards 0.6400 on zero-covid policy concerns, China, US data eyed

• AUDUSD begins the week on a negative note, takes offers to reverse Friday’s heavy gains.
• China’s rejection to hopes of easing covid controls favor bears, Xi’s warning to Putin over nuclear usage strength risk-off mood.
• Mixed US jobs data, Fedspeak joined virus-linked expectations to tease buyers the previous day.
• China trade numbers, risk catalysts could entertain intraday traders but US/China inflation figures are the key to clear directions.

AUDUSD marks a downside gap as it kick-starts the week’s trading around 0.6420, following a solid Friday that helped it post a three-week uptrend. The Aussie pair’s latest drop could be linked to the dashed hopes of easing China’s covid controls, as well as geopolitical fears surrounding Russia. Also likely to have tested the traders are mixed concerns over the Fed’s next move.

China National Health Commission told a news conference during the weekend that China will persevere with its "dynamic-clearing" approach to COVID-19 cases as soon as they emerge, health officials said on Saturday. The news also added that measures must be implemented more precisely and meet the needs of vulnerable people.

''An unverified social media post last week, and a report authorities were working on plans to scrap a system that penalizes airlines for bringing virus cases into the country, boosted investor hopes that China’s pandemic policy may soon be loosened,'' Bloomberg reported.

Additionally, chatters that China President Xi Jinping warned Russian President Vladimir Putin over the usage of nuclear technology in the war against Ukraine also weigh on the sentiment and the AUDUSD prices. On the same line was the news from the Wall Street Journal (WSJ) suggesting that senior White House Official is involved in undisclosed talks with top Putin aides.

Elsewhere, mixed US employment data, Fedspeak and the Fed’s next move also contributed to weighing the US Dollar.

On Friday, the US employment report for October flashed mixed results. That said, the headline Nonfarm Payrolls (NFP) arrived at 261K versus 200K expected and 315K upwardly revised prior. However, the Unemployment Rate surprised markets by rising to 3.7% compared to 3.5% previous readings and 3.6% market forecasts.

Following the data, Richmond Fed President Thomas Barkin said that the US labor market was still tight while also mentioning, “Not sure I know what we'll do in December.” Boston Federal Reserve President Susan Collins said on Friday that it is time for the Fed to shift its focus from the size of rate hikes to the "ultimate "destination," as reported by Reuters.

Amid these plays, Wall Street benchmarks closed positive and so did the US Treasury yields. However, the US Dollar Index (DXY) was down and propelled prices of commodities and Antipodeans.

Moving on, monthly prints of China’s trade numbers and the aforementioned risk catalysts could entertain short-term AUDUSD traders. Following that, the Consumer Price Index (CPI) figures for the US and China will be important to forecast the moves.

Technical analysis

AUDUSD remains on the bear’s radar unless providing a daily closing beyond the 0.6510-15 resistance confluence, including a 50-day EMA and a one-month-old descending trend line.