AUD/USD clings to multi-day high near 0.6800 after China, Aussie data, focus on US PCE Inflation

• AUD/USD seesaws near the highest levels since September 13.
• China Caixin PMI crosses market forecasts, prior data in November but signals activity contraction.
• Higher US inflation expectations, risk surrounding US-China relations also probe buyers.
• Dovish Fedspeak keeps sellers off the table unless the US data prints too strong numbers.

AUD/USD bulls take a breather around 0.6810, after refreshing the 13-week high, as concerns surrounding the US and China challenge the upside momentum during early Thursday. Also likely to have probed the Aussie buyers could be the cautious sentiment ahead of the key US data.

After posting downside official activity data the previous day, China’s Caixin Manufacturing PMI rose to 49.4 in November versus 48.9 market forecasts and 49.2 previous readings. Even so, the private activity gauge remains in the contraction region for the fourth consecutive month.

Earlier in the day, Australia’s Private Capital Expenditure dropped to -0.6% for the third quarter (Q3) versus 1.5% expected and -0.3% prior.

That said, a recent increase in the US inflation expectations, as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, should have also probed the AUD/USD. On the same line were the downbeat comments from US National Security Adviser Jake Sullivan suggesting fresh challenges for the Sino-American optimists. The diplomat said, “The US sees China as a growing strategic threat.”

It should, however, be noted that the dovish comments from the Federal Reserve (Fed) officials, including Chairman Jerome Powell, joins softer US employment-linked data to keep the AUD/USD buyers hopeful. Also likely to signal the quote’s further upside could be the recently easing virus-led activity controls in China as the dragon nation reports the third day of declining daily infections after refreshing the record top.

Amid these plays, S&P 500 Futures print mild gains and the equities in the Asia-Pacific region grind higher by tracking Wall Street gains. Further, the US 10-year Treasury bond yields remain pressured around 3.62% after refreshing a two-month low the previous day.

Looking forward, the Fed’s preferred inflation gauge, namely US Core Personal Consumption Expenditure (PCE) Price Index for October, expected 5.0% YoY in October versus 5.1% prior, will be crucial for near-term directions. Also important to watch will be the monthly prints of the US ISM Manufacturing PMI for November, expected 49.8 versus 50.2 prior.

Technical analysis

Unless breaking the downward-sloping trend line from mid-September, around 0.6765, the AUD/USD pair remains on the way to approaching September’s top surrounding 0.6915, quickly followed by the 200-DMA hurdle near 0.6925.