- Upbeat Chinese manufacturing PMIs underpinned the China-proxy aussie.
- US-China trade uncertainty kept a lid on any further gains for the AUD/USD.
- Investors now look forward to the US ISM PMI for some short-term impetus.
The AUD/USD pair held on to its modest recovery gains and is currently placed near the top end of its daily trading range, around the 0.6775 region.
Having dropped to fresh six-week lows on Friday, the pair managed to gain some positive traction on the first day of a new trading week and for now seems to have snapped three consecutive days of losing streak.
Focus remains on trade developments
Good news from China’s economy, showing that manufacturing activity unexpectedly jumped in November, turned out to be one of the key factors that underpinned demand for the China-proxy Australian dollar.
Adding to the official data released over the weekend, Caixin Manufacturing PMI also bettered market expectations and came in at 51.8 for the reported month as compared to 51.4 previous.
It is worth recalling that China's official Manufacturing PMI moved in the expansion territory for the first time since April and rose to 50.2 from 49.3 recorded in the previous month.
However, concerns over a further deterioration in the US-China relations, especially after the US President Donald Trump signed a law backing Hong Kong, kept a lid on any further gains.
Chinese officials have threatened to take firm countermeasures and the latest developments have threatened to derail the recent progress in trade talks between the world's two largest economies.
Meanwhile, a subdued USD price action, despite some strong follow-through pickup in the US Treasury bond yields, did little to influence the pair's momentum through the early European session.
Moving ahead, Monday's US economic docket – highlighting the release of ISM Manufacturing PMI – might influence the USD price dynamics and produce some short-term trading opportunities.
Technical levels to watch
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