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AUD/USD justifies its status as a risk-barometer by pausing its four-day winning streak and circling 0.6690 in the early hours of Wednesday's Asian session. In doing so, the Aussie pair draws cues from the risk-averse news surrounding China and the contradictory domestic data.

Australia's AiG Manufacturing PMI falls to -19.8 in May from -5.1 in April, while Construction PMI rises to 10.6 from -6.6 in April. In addition, the AiG Industry Index decreased from -10.9 in April to -11.9 during the month in question. However, the S&P Global Composite PMI decreased to 50.1 in June from 50.5 previously, while the Services PMI fell to 50.3 from 50.7 expected and previously.

In addition, fears of a trade war between the United States and China intensify and weigh on sentiment as China announces immediate export restrictions on certain gallium and germanium products beginning August 1. The latest retaliation by the dragon nation is in response to the US ban on AI chip exports to Beijing.

Previously, the Wall Street Journal (WSJ) exacerbated market concerns regarding Sino-American relations by reporting, "The Biden administration is preparing to restrict Chinese companies' access to U.S. cloud-computing services, according to people familiar with the situation, a move that could further strain relations between the world's economic superpowers."

In the same vein, China's President Xi Jinping said on Tuesday during a virtual SCO summit that they should "focus on practical cooperation and accelerate economic recovery. The policymaker added, "(They) need to strengthen strategic communication and coordination, and respect each other's core interests and concerns."

Janet Yellen, the United States Secretary of the Treasury, is in Beijing. Earlier on Tuesday, the US Treasury Department told Reuters that "Treasury Secretary Janet Yellen had a 'frank and productive' discussion today with China's Ambassador." The news also reported that US Treasury Secretary Yellen raised concerns and stressed the significance of cooperation between the two countries.

The Reserve Bank of Australia (RBA) astonished the markets on Tuesday by maintaining the benchmark interest rate at 4.10 percent, despite market expectations of a third consecutive rate increase of 25 basis points. However, the Australian central bank also stated, "Some further tightening of monetary policy may be required," adding that any tightening will depend on the evolution of the economy and inflation.

AUD/USD pair initially declined in response to the RBA's decision to maintain the status quo before regaining the upward momentum that enabled the Aussie pair to post a four-day winning sequence and a one-week high.

Against this backdrop, the US Dollar posted a two-day winning stretch prior to closing Tuesday's North American session near 103.10, while German Bunds rose and Euro Stoxx and FTSE 100 both posted slight losses.

As US traders return from a hiatus, the risk catalysts will be crucial in determining the near-term market direction. The Federal Open Market Committee (FOMC) Minutes from the June meeting, when Fed policymakers announced a pause in rate hikes, will also be crucial to monitor. In addition, the China Caixin Services PMI for June will be crucial.

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