AUD/USD Falls Toward 0.7000 as Weak China Data Increases RBA and Fed Concerns

AUD/USD accepts offers to re-establish intraday low at 0.7040 as market nervousness deepens ahead of Wednesday morning's critical Fed announcement. The Chinese activity statistics provided by the industry group may support the retreat moves.

However, China's Caixin Manufacturing PMI rose from 49.0 to 49.2, falling shy of market estimates of 49.5. Additionally, the sixth consecutive month of readings below 50 reinforces the negative outlook on Australia's largest consumer.

The head of the RBA's Economic Analysis Department, Marion Kohler, stated elsewhere that the bank expects inflation to peak in the fourth quarter of 2022. In contrast, the Wall Street Journal's James Glynn projected that the RBA will deliver a series of rate hikes and retain its aggressive stance at the monetary policy meeting next week.

Despite fading inflation fears and persistent recession worries, traders are preparing for today's critical Federal Open Market Committee (FOMC) monetary policy meeting. Despite recent poor inflation numbers, Fed Chair Jerome Powell's hawkish approach and readiness to defend quick rate hikes make today's Fed meeting intriguing.

In this scenario, S&P 500 Futures register moderate losses, while US Treasury bond yields remain sluggish and arrest their slide from yesterday. The US Dollar Index (DXY) receives bids near 102.15 in an attempt to recoup Tuesday's losses.