Data Dump Awaited

A brief foray to the dizzying heights of 0.7637 was reversed and AUD/USD finish just below neutral levels. The pair last trades at 0.7595, shedding around 3 pips.

• Data released earlier in the session has been broadly positive. AiG Performance of Manufacturing Index rose to 59.9 from 58.8 previously, while Markit Australia PMI printed the final March reading at 56.8, down slightly from 56.9 in February. This is the lowest reading since December, but is still in expansionary territory.
• The AiG Performance of Manufacturing print saw exports drop 3.5 points, likely due to the trade spat with China, while the employment and selling prices subcomponents provided upward impetus.
• Commenting on the PMI results Chris Williamson, Chief Business Economist at IHS Markit, said: "The PMI slipped slightly again in March but was still strong enough to round off the best quarter for manufacturing since the survey began almost five years ago. Given the headwinds of supply shortages, shipping delays, rising prices and ongoing COVID-19 restrictions in many markets, the strong performance is even more impressive."
• From a technical perspective AUD/USD maintains a bearish tone following last week's sell-off. The move lower resulted in a break of support 0.7621, Mar 9 low and a bear trigger. This confirmed a resumption of the bearish cycle that started at 0.8007, Feb 25 high and paves the way for weakness below 0.7564, Feb 2 low. On the upside, key resistance has been established at 0.7849, Mar 18 high. Initial resistance is seen at 0.7664, Mar 30 high.
• US President Biden earlier proposed USD2.25 trillion of infrastructure spending matched by higher taxes including higher corporate rates, measures that could reshape the economic recovery and how much stimulus the Fed needs to provide. Participants will scrutinise the plans in attempts to interpret the effects on USD which will dictate AUD/USD price action.
• There are a number of data releases on the docket today in the form of trade, retail sales or house price figures. However, CBA says it doesn't expect the data to exert a significant effect on prices: "we don't expect today's trade, retail sales or house price data to materially influence AUD. We expect another solid trade surplus of $A9bn in February and for a strong monthly gain in dwelling prices."