AUD/USD seesaws around 6-week low ahead of China PMI, Aussie CPI

While waiting for key catalysts like China PMI, quarterly CPI at home and developments surrounding the Shanghai talks, the AUD/USD pair remains modestly unchanged around six-week low, to 0.6873, during early Asian morning on Wednesday.

The Aussie pair initially declined on Tuesday after the sluggish Building Permits but carried the move down with greater force during the later part as tension increased for global trade watchers. The US President triggered speculations of a no breakthrough in trade stalemate at the end of two-day negotiations between the US and Chinese diplomats in Shanghai.

Market sentiment was also under pressure ahead of today’s key monetary policy meeting by the US Federal Reserve that is expected to deliver its first rate cut in more than a decade. The US 10-year treasury yield clings to 2.06% by the press time.

Investors now keep an eye over the economic calendar, firstly for China’s July month official activity indices and then for the second quarter (Q2) Aussie CPI data, and also observe the trade news for fresh impulse. Following that Fed decision will be keenly awaited.

Forecasts suggest that China’s Manufacturing Purchasing Managers’ Index (PMI) may inch up from 49.4 to 49.6 while Non-Manufacturing PMI can increase to 54.5 from 54.2. Further, Australia’s Q2 Consumer Price Index (CPI) is likely rising to 0.5% from 0.0% on a QoQ basis whereas Reserve Bank of Australia’s (RBA) Trimmed Mean CPI might also expand to 0.4% from 0.3% on the same timeframe.

While likely improvement in data from China, Australia’s biggest customer, is expected to join upbeat inflation numbers from home, the Aussie may recover some of its latest losses. However, doubts over the US-China trade deal and Fed decision can keep the buyers under pressure.

Technical Analysis

Although close to the oversold condition of 14-day relative strength index (RSI) indicates the quote’s pullback to early-month low surrounding 0.6910, pair’s sustained trading below 0.6880 can keep pushing sellers towards June month bottom close to 0.6830.