AUD/USD struggles to cheer upbeat China PMI near 0.6700 amid mixed Aussie trade data, recession woes

• AUD/USD remains depressed for the third consecutive day amid mixed Australia trade data, upbeat China PMI figures.
• Australia’s Trade Balance improved but Imports, Exports dropped in February, China Caixin Services PMI rallied for March.
• Recession woes join geopolitical concerns to weigh on the Aussie pair.
• Softer US data, yields allow AUD/USD pair buyers to remain hopeful.

AUD/USD licks its wounds near the intraday low after China data allowed bears to take a breather during early Thursday. Even so, downbeat Australian trade numbers and risk-off mood weighs on the Aussie pair of late.

That said, China’s Caixin Services PMI rallied to 57.8 versus 54.0 expected 55.0 prior.

Earlier in the day, Australia’s headline Trade Balance improved to 13,870M versus 11,100 expected and 11,688M prior. However, Exports and Imports both dropped to -3.0% and -9.0% compared to 1.0% and 5.0% respective priors.

Additionally challenging the AUD/USD bulls is the Reserve Bank of Australia's (RBA) Financial Stability Review (FSR) which mentioned the stress in the domestic construction sector and commercial lending.

In addition to the mostly downbeat data at home, as well as from the biggest customer China, AUD/USD pair bears the burden of the market’s risk-off mood and the dovish bias of the RBA.

That said, consecutive weakness in the US employment numbers raised fears of a recession in the world’s biggest economy and contagion risk associated with the same. On the other hand, RBA Governor Philip Lowe tried to appease hawks, following the RBA’s pause in rate hikes after 10 such increases. The policymaker ruled out rate cuts while also saying, “Balance of risks lean toward further rate rises.”

Amid these plays, S&P 500 Futures drop for the third consecutive day even if the benchmark US Treasury bond yields remain sluggish around the multi-day bottom.

Having witnessed the initial reaction to second-tier data from Australia and China, the AUD/USD pair traders may rely on the risk catalysts for intraday directions. Also important to watch will be the weekly US jobless claims data ahead of Friday’s all-important Nonfarm Payrolls (NFP).

To sum up, sour sentiment joins the dovish RBA bias to weigh on the AUD/USD prices but the broad US Dollar weakness challenges the Aussie pair bears.

Technical analysis

A convergence of a one-month-old ascending support line and the 21-DMA highlights 0.6680 as the key short-term key support for the AUD/USD pair traders to watch before welcoming bears.