AUD Holds Steady Amid China's PMI Data, US Dollar Rebound Looms

The Australian Dollar (AUD) experienced little movement following China's NBS Purchasing Managers' Index (PMI) data release on Monday. The AUD/USD pair held steady, trading around 0.7160 during Asian hours. This stability is attributed to the strong trade ties between Australia and China.

China's Manufacturing PMI rose to 49.8 in August, surpassing market consensus of 49.7. Meanwhile, Australia's TD-MI Inflation Gauge increased to 4.8% year-over-year in August, from 4% in July.

The upside for the AUD/USD pair may be limited as the US Dollar (USD) could rebound due to hawkish remarks from Federal Reserve Chair Kevin Warsh. He emphasized that policymakers must ensure underlying inflation is moving towards their objective at a sufficient speed. The Fed's next interest rate decision will be made on September 15-16, with markets pricing in nearly a 57.5% chance of at least 25 basis points next month.

Strategists at UOB Group note that the recent AUD/USD upswing is losing steam as it approaches key resistance levels. They caution that upward momentum is deteriorating amid negative divergence on momentum indicators, but still believe there's a chance for AUD to test 0.7220 before the risk of a pullback increases.