AUD/USD trades at weekly lows below 0.71 ahead of China PMI data

• US Dollar Index continues to recover this week’s losses.
• AiG Performance of Manufacturing Index improves in February.  
• Coming up: Caixin Manufacturing PMI data from China.

Following yesterday’s drop, the AUD/USD pair extended its slide and failed to hold above the 0.71 handle on Thursday pressured by the broad-based USD strength in the second half of the day. As of writing, the pair is trading at 0.7095, losing 0.6% on a daily basis.

Earlier today, the U.S. Bureau of Economic Analysis in its first estimate announced that the real GDP is expected to expand by 2.6% on a yearly basis in the fourth quarter. Additionally, the ISM-Chicago’s PMI rose to its highest level since December 2017 at 64.7 to help the greenback preserve its strength. The US Dollar Index, which slumped to its lowest level in more than three weeks at 95.82, rebounded decisively and was last seen adding 0.12% on the day at 96.22. Furthermore, a more-than-1% increase in the 10-year US T-bond yield also supported the DXY’s recovery.

Meanwhile, the  Australian Industry Group (AIG) just recently reported that the Performance of Manufacturing Index improved to 54 in February from 52.5 in January but failed to help the AUD recover its losses. Later in the Asian session, Caixin Manufacturing PMI from China, which dropped below the 50 mark in January to show a contraction in the business activity in the manufacturing sector, will be watched closely by the participants.

Technical levels to consider