AUD/USD bears poke 0.6700 key support, China data dump, RBA’s Lowe eyed

• AUD/USD remains pressured at the lowest levels in two months, sellers attack upward sloping support line from July.
• Mostly firmer US data, fears surrounding China’s economy and mixed Aussie jobs report pleased bears.
• Firmer yields, hawkish Fed bets could keep focus on the next week’s FOMC.
• China’s Industrial Production, Retail Sales for August will precede US Michigan Consumer Index to direct intraday moves.

AUD/USD holds lower ground near the yearly bottom marked in July, poking the two-month-old support line, as risk-aversion propels the US dollar ahead of the day’s key catalysts. That said, the Aussie pair drops to 0.6696 by the press time.

Strong US data joined pessimism surrounding China and Europe, as well as mixed Australia employment and inflation expectations numbers, to weigh on the AUD/USD prices the previous day.

US Retail Sales rose 0.3% in August versus 0.0% expected and July’s revised down -0.4%. Further, NY Fed Empire State Manufacturing Index improved to -1.5 in September compared to -31.3 in August and market expectation of -13. Alternatively, Philadelphia Fed Manufacturing Index declined to -9.9 for the said month compared to 2.8 expected and 6.2 prior. Additionally, US Industrial Production slid to -0.2% in August versus market expectation for an expansion of 0.1% and downwardly revised prior of 0.5%.

At home, Australia’s Employment Change rose to 33.5K in August, versus 35K expected and -40.9K prior. Further, the Unemployment Rate also rose beyond 3.4% market consensus and the previous readings to 3.5% whereas the Participation Rate matched 66.6% forecasts during the stated period versus 66.4% prior. Also, Australia’s Consumer Inflation Expectations softened to 5.4% for September versus 6.7% expected and 5.9% prior.

It should be noted that Bloomberg ran a piece suggesting that China is likely to witness harder days than it witnessed in 2020. On the same line was the news surrounding the Sino-American tussles and the People’s Bank of China’s (PBOC) inaction. Elsewhere, fears that the Eurozone will remain in dire conditions despite having a good stock for winter joined hawkish comments from the European Central Bank (ECB) policymakers to keep the pessimism higher.

Amid these plays, Wall Street closed in the red and the US Treasury bond yields were firmer. Further, the market’s pricing of the Fed’s 0.75% and 1.0% rate hikes in the next week’s Federal Open Market Committee (FOMC) also rose and weighed on the AUD/USD prices.

Looking forward, China’s monthly data dump including the Industrial Production, Retail Sales and housing numbers for August could offer immediate directions. Following that, Reserve Bank of Australia (RBA) Governor Philip Lowe’s Testimony and preliminary readings of the Michigan Consumer Sentiment Index (CSI) will be crucial for nearby directions. Above all, bears are likely to keep reins amid anxiety ahead of the Fed meeting.

Technical analysis

With the AUD/USD pair’s U-turn from the 50-DMA, around 0.6890 by the press time, joining the lack of oversold RSI (14) and bearish MACD signals, the pair is all set to revisit the yearly low near 0.6680.