AUD/USD: Bulls cheer risk-on mood to attack 0.7400 ahead of China PMI

AUD/USD takes rounds to 0.7385 during the initial Asian session trading on Monday. In doing so, the quote wavers inside nearly 10-pip range around the three months’ high flashed late last week.

Although China’s latest trade-punitive measures over Australian goods challenge AUD/USD bulls, the coronavirus (COVID-19) vaccine news and the broad US dollar weakness favor the pair’s north-run.

Tussle with Beijing can dim importance of China PMI…

Australia’s largest customer China still envies the Scott Morrison-led government’s support to the investigation over the covid root and outbreak. Recently, Beijing announced more sanctions over Aussie wines while stopping multiple coal ships from Canberra from entering the dragon nation, per industry talks. While considering this, Australia’s Trade Minister Simon Birmingham said over the weekend that China’s steps to curb imports of his country’s goods are “aggressive”. The Aussie diplomat also mentioned that such measures undermined confidence in the global economic recovery.

Alternatively, governments in the UK and Europe are readying the approval of the leading COVID-19 vaccines from Pfizer-BioNTech and Moderna. The news, circulated by the Financial Times (FT) favors the market’s optimism as the global economy has had enough of wrangling with the pandemic in 2020.

Even so, the surge in the virus figures and fears of no-deal Brexit warrant optimists to remain cautious.

The mood could be well perceived while observing the moves of safe-havens and risk barometers, the US dollar index (DXY) and equities respectively. While the DXY remains depressed around a three-month low, DJI refreshed the record top while S&P 500 probed the all-time high during the last week.

Read: S&P 500 Weekly Forecast: Investors getting set for the Santa-Clause rally built on a house of cards

Looking forward, Australia’s TD Securities Inflation data for November, prior 1.1% YoY, can offer intermediate moves ahead of the Chinese NBS Manufacturing PMI for November, expected 51.5 versus 51.4. Although China PMI becomes the key for AUD/USD traders, the latest tension among the trading partners may weigh on the importance of the data for the quote.

Technical analysis

AUD/USD bulls cheer sustained trading beyond 0.7345/40 resistance, now support, comprising highs marked between mid-September and November 17, to target July 2018 top surrounding 0.7485. However, 0.7400 round-figure offers an immediate challenge.