AUD/USD remains bid above 0.77 despite below-forecast China PMI

AUD/USD continues to trade in the positive territory above 0.77 even as China data released soon before press time shows the economic activity slowed modestly in December. 

The Caixin Manufacturing PMI, which focuses on small and medium-sized export-oriented units, fell to 53.00 in December from November's 54.9, missing the expected reading of 54.9. The government PMI also declined to  51.9 in December from 52.1 in November, data released last week showed. 

So far, however, the weaker-than-expected PMIs and reports of stricter coronavirus lockdown restrictions in Scotland and Japan considering imposing an emergency have failed to weaken the China-sensitive AUD. 

The currency's resilience could be associated with expectations for continued recovery in global activity and its positive impact on trade-sensitive regions like Australia. 

"The global manufacturing cycle will likely also continue to improve at least during Q1 and Q2 due to lagged effects of the stimulus. No matter whether we use the Chinese credit cycle or the combined year on year effect of the drop in 2 and 10yr bond yields as the gauge, we find that the cycle will not peak until sometime during the early summer of 2021," Nordea analysts said in their weekly note. 

Technical levels