AUD/USD snaps four-day uptrend bear 0.6680 on downbeat China Caixin Services PMI, Fed Minutes eyed

• AUD/USD appears hesitant during fifth price-positive day ahead of Fed minutes.
• China Caixin Services PMI slides to 53.9 in June.
• China’s defense of the Yuan, softer US data join RBA’s hawkish halt to lure Aussie bulls.
• Aussie Senator rules out recession woes despite calling for actions to ‘phase’ infrastructure projects.

AUD/USD slips to 0.6680 on downbeat China data while snapping four-day uptrend amid early Wednesday. In doing so, the Aussie pair also justifies challenges to sentiment from the US-China tension and the recession woes.

China’s Caixin Services PMI for June eased to 53.9 versus 57.1 prior. Earlier in the week, China’s Caixin Manufacturing PMI eased to 50.5 for the said month, versus 50.9 prior and 50.2 market forecasts. It’s worth noting that the official PMIs for the dragon nation, for June, also appears less impressive and hence keep the AUD/USD bears hopeful.

Apart from the softer China data, fears of the US economic slowdown and the Sino-American trade war also exert downside pressure on the AUD/USD price.

It should be noted that the US two-year Treasury bond yields dropped to 4.85% while the 10-year counterpart fell to 3.78%, before ending Monday’s trading around 4.93% and 3.86% respectively. Following the bond market data, Reuters said that the yield curve briefly inverted to 42-year lows Monday as investors increasingly expect the Fed to raise its benchmark borrowing rates to keep inflation in check.

That said, China announced abrupt controls on exports of some gallium and germanium products, effective from August 1. The dragon nation’s latest retaliation is in reaction to the US curb on AI chips’ shipments to Beijing.

 Amid these plays, the S&P00 Futures print mild losses whereas the US 10-year and two-year Treasury bond yields remain mostly unchanged near 3.85% and 4.90% by the press time.

Looking forward, news about China, recession and the Federal Open Market Committee (FOMC) Minutes for the June meeting will be crucial for the AUD/USD traders to watch for clear directions. That said, the Fed policymakers announced a pause in the rate hike during June meeting but Chairman Jerome Powell signalled “two more rate hikes in 2023” afterward, which in turn keeps the pair sellers hopeful.

Technical analysis

A clear upside break of the 13-day-old previous resistance line, now support near 0.6585, keeps the AUD/USD buyers hopeful even if the 200-DMA challenges the bulls around the 0.6700 threshold.