AUD/USD stays directed towards 0.6900 after China PMI

AUD/USD takes the bids near 0.6869 during the early Asian session on Tuesday. The pair recently gained support from upbeat China data. However, challenges to the market’s risk-tone sentiment seem to guard the pair’s immediate upside.

China data keeps buyers hopeful…

AUD/USD registers a 10-pip rise after China’s official activity numbers helped traders keep the previous day’s optimism. The headline NBS Manufacturing PMI rose past-50.4 forecast and 50.6 prior to 50.9 whereas Non-Manufacturing PMI also crossed 53.6 earlier readouts with 54.4 levels.

Risk-on sentiment fades…

Global markets cheered upbeat US data to trigger the risk reset at the start of the week despite worries over the rising coronavirus (COVID-19) numbers. However, the optimism couldn’t last long as the World Health Organization (WHO) Director-General Tedros Adhanom Ghebreyesus said that the pandemic is speeding up. Dr. Tedros earlier said that “the worst is yet to come”.

Also challenging the shift in the risk-tone sentiment could be the latest virus figures from China as well as US ban on controlled defense exports to Hong Kong. Furthermore, fears of another virus outbreak, spread by the BBC, as well as downbeat prepared remarks, for today’s testimony, by the US Fed Chair Jerome Powell also weighed on the market’s mood.

Against this backdrop, the US 10-year treasury yields remain downbeat around 0.63% while S&P 500 Futures recede earlier strength while taking rounds to 3,052, up 0.14%. Also portraying the market mood could be the pullback in Japan’s Nikkei 225 to currently around 22,354.

Looking forward, traders will have a busy day with comments from RBA Deputy Governor Guy Debelle be in the market’s focus as an immediate catalyst. The RBA policymaker is scheduled to speak on “The RBA’s policy actions and balance sheet” at 02:30 AM GMT and might offer further direction to the aussie pair’s recent recoveries. However, the fears of the pandemic and fresh US-China tussle might keep the upside tabbed.

During the US session, testimonies by the Fed Chair Jerome Powell and Treasury Secretary Steve Mnuchin will join key data to offer an interesting day ahead.

Technical analysis

A downward sloping trend line from June 10 joins an ascending support line since the mid-month to portray an immediate triangle formation between 0.6850 and 0.6925. Though, the pair’s sustained trading below a 21-day SMA level of 0.6900 keeps the sellers hopeful.