AUD/USD remains bid after upbeat China PMI release, AU-US yield spread unchanged

AUD/USD added a couple of pips to clock a fresh session high of 0.8042 after the China Caixin manufacturing PMI for July came-in at 51.1 vs. 50.4 expected. 

The world’s second largest economy saw a solid upturn in the new export sales with output and new orders rising at the fastest rate in five months. 

However, the Aussie 10-yr bond yield [2.725%] has not really moved higher following the China data release. The spread between the Aussie and the US 10-yr yield also remains stagnant at 42 basis points. Consequently, further gains in the AUD/USD may be hard to come unless EUR/USD extends the overnight gains. 

The focus now shifts to the RBA rate decision. The key things to watch out for are - central bank’s take on the soaring Aussie updated forecasts for Australian economic growth, inflation and unemployment. 

AUD/USD Technical Levels

A break above 0.8050 [monthly 50-MA] would open up upside towards 0.8066 [July 27 high] and 0.81 [zero levels]. On the other hand, a breakdown of support at 0.80 [zero levels] could yield a pullback to 0.7968 [10-DMA] and 0.7952 [1-hour 200-MA].