AUD/USD tests bearishness near 0.6350 as China's GDP and US PMIs show improvement

After China released positive Gross Domestic Product (GDP) figures for the third quarter (Q3) early on Monday, AUD/USD bids perk up to pare intraday losses to 0.6365. However, negative sentiment, volatile markets, and pessimism surrounding Australia appear to provide challenges for Aussie pair buyers.

China's GDP for the third quarter grew by 3.9% compared to the market's prediction of 3.4%, while September's Industrial Output grew by 6.3% opposed to the market's forecast of 4.5%. In September, however, China's retail sales fell to 2.5% from 3.3% as predicted by the market.

In addition to hawkish Fed bets and geopolitical concerns about China, it should be noted that recent AUD/USD pricing has been affected by expectations that the Australian government may decrease growth projections in the forthcoming budget update.

According to new forecasts to be published by Treasurer Jim Chalmers in Tuesday's budget, Reuters stated that Australia's economic growth will decline significantly in the coming fiscal year as rising inflation reduces family expenditures. ABC News reported elsewhere that Ukrainian General Oleksandr Syrskiy expressed nuclear war concerns. Concerns that Chinese President Xi Jinping will escalate geopolitical tensions with the United States over Taiwan have also weighed on the AUD/USD exchange rate.

Despite this, S&P 500 Futures post intraday gains of 0.50 percent, while 10-year US Treasury rates remain at 4.19 percent, extending Friday's falls from the 14-year high.

The S&P Global Manufacturing PMI for Australia declined to 52.8 from 53.5 in September and 52.5 as projected by the market, while the Services PMI decreased to 49 from 50.6, and 50.5 correspondingly. This resulted in the S&P Global Composite PMI sliding into contraction territory with a value of 49.6 compared to 50.9 previously.

Christopher Kent, Assistant Governor (Economic) of the Reserve Bank of Australia (RBA), emphasizes that the RBA board anticipates further interest rate increases in the near future. The policymaker also highlighted, according to Reuters, that the magnitude and timing of rate hikes will depend on incoming data.

Future AUD/USD traders will pay close attention to risk catalysts as well as the preliminary US PMI figures for October. In spite of this, AUD/USD bears are likely to retain control given the recent surge in hawkish Fed bets and geopolitical fears.