AUD/USD: No response to China Caixin Manufacturing PMI

• AUD/USD is barely moving in response to key China data. 
• Caixin's Manufacturing PMI dropped to 51.1 in January from December's 51.5 reading. 
• Signs of risk reset are likely helping the AUD stay bid.

A gauge of China's manufacturing activity released soon before press time is struggling to move the needle on the AUD/USD pair. 

The Caixin Manufacturing PMI, which surveys small and medium-sized export-oriented units, fell to 51.1 in January from the preceding month's 51.5 reading. The actual figure missed the estimate of 51.3. 

China's National Bureau of Statistics (NBS) Manufacturing PMI, which focuses on state-owned enterprises, also fell to 50.00 in January from December's 50.2, hitting the neutral mark that separates expansion from contraction on a monthly basis. 

The slowdown in the pace of expansion in the manufacturing activity, as highlighted by PMIs, indicates the economy is not out of the woods yet and the sector could suffer a contraction in February, courtest of Coronovirus scare. 

So far, however, the AUD/USD pair has barely moved in response to China data. At press time, the pair is trading at session highs near 0.6707, representing a 0.23% gain on the day. That level was seen put to test right before the release of China's PMI data. 

The uptick could be associated with the signs of risk reset in the equities. Currently, the futures on the S&P 500 are reporting a 0.67% gain. 

Also, the markets have priced out prospects of an RBA rate cut on Tuesday. The central bank is now expected to deliver a rate cut in April or May. Further, there is growing consensus in the market that the Australian government may deliver fiscal stimulus to counter the nation-wide demand shock arising out of the virus fears and bush fires. 

The AUD, therefore, could extend gains during the day ahead. 

Technical levels