AUD/USD refreshes monthly low near 0.6800 on downbeat Aussie/China data, risk-aversion

• AUD/USD takes offers to poke the lowest levels since July 19.
• Australia Private Capital Expenditure, Housing data joined downbeat China Caixin Manufacturing PMI to favor bears.
• Recession woes, China concerns propel risk-off mood, strong yields add strength to the US dollar’s demand.
• US ISM Manufacturing PMI, second-tier jobs data may entertain traders ahead of US NFP, risk catalysts are essential too.

AUD/USD drops to the fresh 1.5-month low around 0.6800 as bears cheer downbeat Aussie data and risk-off mood during Thursday’s Asian session. That said, the Aussie pair’s latest weakness could also be linked to the negative concerns surrounding the major customer China.

China’s Caixin Manufacturing PMI marked the lowest prints in three months while suggesting a contraction in activities with 49.5 figure, versus 50.2 expected and 50.4 prior.

Elsewhere, Australia’s Home Loans slumped by -7.0% in July versus -3.0% forecast and -3.3% prior. On the same line is the Investment Lending for Homes for the said month, -11.2% compared to -6.3%. It should be noted that the Aussie Private Capital Expenditure repeated the previous contraction of 0.3% during the second quarter (Q2), down from hopes of a 1.5% upside.

Talking about the risk, the US 10-year Treasury yields refreshed a two-month high of around 3.21%, while the two-year bond coupons jumped to the highest levels since 2007, near 3.51% at the latest. Also portraying the sour sentiment is the S&P 500 Futures’ 0.36% intraday fall to the lowest levels since late July, at 3,930 by the press time.

It’s worth noting that the chatters surrounding another ship blocking the moves in Suez Canal joined pessimism over China’s covid conditions, downbeat statistics and skirmishes with the US over Taiwan appear to weigh on the market sentiment of late. Recently, Taiwan's President Tsai Ing-Wen mentioned that Taiwan wants to expand its semiconductor industry collaboration with the US.

Given the Fed policymakers’ latest hawkish mood, despite mixed data, AUD/USD bears are likely to keep reins as updates from China are also grim. However, today’s US ISM Manufacturing PMI for August, expected 52.8 versus 52.0 prior, could entertain the traders ahead of Friday’s US Nonfarm Payrolls (NFP).

Technical analysis

A clear downside break of May’s low, near 0.6830 directs AUD/USD bears towards early July’s bottom around 0.6760. Alternatively, a downward sloping support-turned-resistance line from early August, close to 0.6850, will join the 0.6830 hurdle to probe the pair’s corrective pullback.