Skids below 0.6400 on weak Caixin Manufacturing PMI

• AUD/USD drops to near 0.6400 as Caixin Manufacturing PMI remains weaker than anticipated.
• The US Dollar Index extends its recovery to near 106.60 as the market mood remains downbeat.
• AUD/USD trades in a 0.6363-0.6522 range from the past one-and-a-half months.

The AUD/USD pair extended downside to near the round-level support of 0.6400 in the early New York session. The Aussie asset faces selling pressure as Caixin Manufacturing PMI remained weaker than anticipated.

Caixin Manufacturing PMI for September failed to match expectations but managed to remain above the 50.0 threshold. A figure below the 50.0 threshold is considered a contraction in economic activities. The economic data landed at 50.6 lower than estimates and the August reading of 51.2 and 51.0 respectively.

The US Dollar Index (DXY) extends its recovery to near 106.60 as the market mood remains downbeat after China’s weak factory activity data. Meanwhile, investors await the speech from Federal Reserve (Fed) chair Jerome Powell. Fed Powell would provide cues about the likely monetary policy action in November.

AUD/USD trades in a 0.6363-0.6522 range from the past one-and-a-half months. The Aussie asset is declining towards the lower portion of the consolidation. The 200-period Exponential Moving Average (EMA) at 0.6450 is considered a barricade for the Australian Dollar bulls.

The Relative Strength Index (RSI) (14) skids into the bearish range of 20.00-40.000, which warrants more downside.

A fresh downside would appear if the Aussie asset will drop below August 17 low around 0.6360. This would expose the asset to the round-level support of 0.6300 followed by 03 November 2022 low at 0.6272.

In an alternate scenario, a decisive break above August 15 high around 0.6522 will drive the asset to August 9 high at 0.6571. Breach of the latter will drive the asset towards August 10 high at 0.6616.

AUD/USD four-hour chart