AUD/USD picks bids around 0.6800 despite weak Caixin PMI, US ISM PMI, RBA in focus

The AUD/USD pair has witnessed a decent buying interest below 0.6800 in the early European session. The asset is attempting a break above its prior high volume area, which is in a narrow range of 0.6805-0.6822. On a broader note, the pair witnessed a perpendicular downside move after surrendering the immediate support of 0.6840.

The major has attracted bids despite the release of the downbeat Caixin Manufacturing PMI data. The economic data has been trimmed to 49.5 against the consensus of 50.2 and the prior release of 50.4. The Chinese economy is facing the headwinds of a resurgence in Covid-19 cases, and lockdown curbs by the Chinese administration have soared recession fears.

It is worth noting that Australia is a leading trading partner of China and dismal Chinese economic activities could put significant pressure on the aussie dollar.

Meanwhile, the US dollar index (DXY) displays signs of exhaustion as the asset has failed to sustain above 109.10. However, the upside remains favored as the Federal Reserve (Fed) seems bound to hike interest rates in September to stabilise prices. In today’s session, the release of the US ISM Manufacturing PMI data holds significant importance. August manufacturing activities are seen lower at 52.0 vs. 52.8 reported earlier.

On the Aussie front, investors are awaiting the announcement of the interest rate decision by the Reserve Bank of Australia (RBA), which is due next week. RBA Governor Philip Lowe is expected to announce a fourth consecutive 50 basis points (bps) hike in its Official Cash Rate (OCR).