AUD/USD ignores Aussie government’s push for more wages near 0.6450, focus on RBA, Australia GDP

• AUD/USD remains defensive after the first weekly gain in seven.
• China stimulus, hopes of more wages in Australia help Aussie buyers to remain optimistic.
• Recently upbeat US data cap recovery moves amid anxiety ahead of top-tier data/events.
• RBA, Australia Q2 GDP and US USM Services PMI will provide fresh impulse, US holiday may restrict immediate moves.

AUD/USD struggles to extend the first weekly gain in seven as it stays pressured around 0.6450 during the early hours of Monday’s Asian session. The pair’s latest weakness could be linked to Friday’s upbeat US jobs report and the weekend headlines suggesting the US-China jitters. However, expectations of witnessing an upbeat employment bill from the Government and China stimulus keep the buyers hopeful.

That said, Australia's Labor government will introduce legislation to close "loopholes" in workplace law, a move opposed by employer groups fearing higher costs, when parliament returns on Monday per Reuters. The bill will push employers toward paying more and can help fuel inflation, which in turn may keep the Reserve Bank of Australia (RBA) hawks on the positive side.

Elsewhere, China President Xi Jinping showed readiness for more collaboration with the international players of the services industry.

On the other hand, US Commerce Secretary Gina Raimondo warned China as she returned from her trip to Beijing while stating that patience is wearing thin among the US business in China. Furthermore, US President Joe Biden also crossed wires during the weekend while showing his disappointment with Chinese President Xi Jinping’s decision to remain absent from the summit of G20 leaders in India.

During the last week, China’s Caixin Manufacturing PMI for August rose to 51.0 versus 49.3 market forecasts and 49.2 previous readings. On the same line, China’s official NBS Manufacturing PMI for August rose to 49.7 versus 49.4 expected and 49.3 previous readings. However, the Non-Manufacturing PMI came in as 51.0 compared to 51.5 prior readouts and market forecasts of 51.1.

On a different page, China's central bank, namely the People's Bank of China (PBoC), announced a heavy cut to its foreign exchange reserve requirement ratio (FX RRR) to 4% from 6.0% effective from September 15.

That said, a slew of China banks cut interest rates on Yuan deposits to ease the pressure from lower mortgage rates announced previously. Among them, ICBC, China Industrial Bank, Agricultural Bank of China and Bank of China (BoC) gained major attention. Additionally, Reuters cited four people familiar with the matter to report that China is likely to step up action to revive the country’s property sector.

On Friday, the headline US Nonfarm Payrolls (NFP) rose to 187K in August versus 170K expected and 157K prior (revised) even as the Unemployment Rate marked an uptick to 3.8% from 3.5% market forecasts and previous readings. Further, the Average Hourly Earnings also eased to 0.2% and 4.3% compared to 0.4% and 4.4% respective priors. Additionally, the US ISM Manufacturing PMI also impressed the US Dollar buyers with the 47.6 figures versus analysts’ estimation of 47.0 versus 46.4 previous readings.

Following the data, Federal Reserve Bank of Cleveland President Loretta J. Mester downplayed the increase in the Unemployment Rate to 3.8% by stating that the level "is still low." The policymaker termed the US job market as strong despite recent rebalancing as she spoke at an event in Germany. About inflation, Fed’s Mester acknowledged that progress has been made but noted it remains elevated.

Amid these plays, the benchmark US 10-year Treasury bond yields have been declining in the last two consecutive weeks after rising to the highest levels since 2007, to 4.18% at the latest. Further, the Wall Street benchmarks also improved in the recent few days, despite Friday’s sluggish closing.

Looking forward, today’s Australian government’s push for more wages will entertain the AUD/USD traders amid the US holiday. However, major attention will be given to this week’s monetary policy meeting of the Reserve Bank of Australia (RBA) and the second-quarter Gross Domestic Product (GDP) for clear directions, not to forget the US ISM Services PMI for August.

Technical analysis

A failure to cross a horizontal resistance surrounding the 0.6500 round figure, comprising levels marked during late May and early June, keeps the AUD/USD bears hopeful.