AUD/USD slips back under 0.7200 as China PMI sinks to 28-month low

• The AUD is seeing hesitation  following China’s missed PMI reading.
• Risk-off threatens to return to the fold in the early week on bad data.

The AUD/USD is faltering back towards 0.7185 following China’s latest PMI results, which signals a continuing slowdown within China’s domestic economy as trade war angst continues to build.

China’s Caixin services PMI drops sharply to 50.8 in October, 28-month lows

China’s slowdown continues to steepen as both the Caixin Services and Composite PMIs  took a header into multi-year lows, with the Caixin Services PMI slipping to a 28-month low and the Composite Output Index declining to 50.5 from September’s 52.1, and investor confidence in the Antipodeans could be rattled for the rest of the early week as trade war fallout continues to drag on China’s economy, which bodes poorly for the Aussie.

Aussie traders will also be focusing on early Tuesday’s action, with the Reserve Bank of Australia (RBA) slated to make another appearance at 03:30 GMT, although the central bank is unlikely to make any moves on policy in the near future, especially with trade  woes squeezing Australia’s largest trading partner.

AUD/USD levels to watch

Monday’s unease could give way to further bullish gains for the Aussie if USD traders are willing to step down in the coming sessions, and as noted by FXStreet’s own Valeria Bednarik: “the pair is currently around the 61.8% retracement of its September/October decline at 0.7200, and the daily chart shows that if flirted with a bearish 100 DMA before retreating but settling well above its 20 DMA. Technical indicators have pulled down from daily highs but remain within positive levels barely losing their bullish momentum near overbought territory. In the 4 hours chart, however, the pair holds on to the bullish stance, as it settled well above all of its moving averages, with the shortest advancing thought the larger ones, as technical indicators attempt to resume their advances well into positive territory and after correcting extreme overbought readings. The bearish case could return if the pair losses quickly the 0.7160 level at the beginning of the week, with the next support then being the 0.7100 level, while a more sustainable bullish trend will appear on a definitive break above 0.7250.”

Support levels: 0.7170 0.7120 0.7080

Resistance levels: 0.7210 0.7250 0.7290