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AUD/USD nurses its wounds around the mid-0.6600s amidst a sluggish start to Thursday's Asian session, following its first daily loss in five days. In doing so, the Aussie-U.S. dollar pair reflects the cautious sentiment preceding Australian trade data for May, as well as the recent muddled Fed catalysts. Nonetheless, pessimism about Beijing, Canberra's largest customer, and broader recession concerns keep the risk-barometer tandem depressed.

A rise in Chinese investor purchases of Hong Kong and Macau wealth products combines with pessimism regarding China's top-tier housing players like Shimao Group and the government-backed Sino-Ocean Group to amplify economic concerns regarding the world's largest industrial actor, China.

Combined with the ongoing Sino-American tension and weaker China data, this adds to the downward pressure on the AUD/USD exchange rate. China's Caixin Services PMI for June fell to 53.9 from 57.1 the previous month, adding to the escalating concerns of US-China tension amid fresh warnings of further trade restrictions from Beijing, which weighed on the sentiment and prices of riskier assets such as AUD/USD on Wednesday.

However, China's Global Times and former Vice Commerce Minister warned of difficulties for U.S. IT and metal companies. China announced precipitous export restrictions on certain gallium and germanium products on Wednesday, effective August 1. The latest retaliation by the dragon nation is in response to the US ban on AI chip exports to Beijing.

The Federal Open Market Committee (FOMC) Minutes for the June meeting indicate that almost all members consented to a pause in the rate hike trajectory, while some policymakers indicated a preference for a 0.25 percentage point rate hike in July. The Aussie pair is negatively affected by the US central bank's hawkish bias compared to the Reserve Bank of Australia's (RBA) pause in the rate rise.

Nonetheless, weaker US data and recession concerns, as signalled by the inversion of the US Treasury bond yield curve, supported the AUD/USD. In spite of this, the US Factory Orders report a 0.3% MoM increase for May, versus the 0.8% expected. Additionally, the official publication noted that new orders for manufactured durable products increased for the third consecutive month in May. The Gold Price increased earlier in the week as the US ISM Manufacturing PMI and S&P Manufacturing PMI came in weaker than expected.

The markets almost priced in a June Fed rate hike of 0.25 basis points, which weighed on the Gold Price as Wall Street benchmarks closed in the red and US Treasury bond yields rose alongside the US Dollar Index (DXY).

Australia's May Imports, Exports, and Trade Balance will be the immediate catalyst for AUD/USD pair traders to monitor. After that, the US ISM Services PMI and ADP Employment Change for June will be crucial, as both will help determine Friday's crucial Nonfarm Payrolls (NFP) and impact the AUD/USD exchange rate. The risk catalysts, namely China news and economic issues, will be the most important to monitor for direction clarity.

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