Positive China PMI and IMF growth predictions probe bears in mid-0.7000s

AUD/USD tests the two-day downtrend while gaining bids off the intraday low in response to risk-positive news from China and the International Monetary Fund (IMF). Despite this, buyers appear to struggle to regain control ahead of this week's high-level central bank conference. In spite of this, the AUD/USD pair climbed to 0.7055 in the early hours of Tuesday, following a recent rebound from the intraday low of 0.7038.

Recently, the IMF increased its global growth projections and stated that the developing market growth slowdown bottomed out in 2022. The global lender also cited a minor improvement in the global GDP prognosis for 2023, aided by "surprisingly resilient" demand in the United States and Europe, a decline in energy prices, and the reopening of China's economy after Beijing abandoned its draconian COVID-19 regulations.

Prior to that, China's NBS Manufacturing PMI increased to 50.1, compared to 49.7 market expectations and 47.0 previously, while Non-Manufacturing PMI also increased to 54.4, compared to 51.0 market expectations and 41.6 previously.

The announcement that the administration of US President Joe Biden is prepared to withdraw the Covid-led emergencies as of May 11 may have supported the risk-on profile as of late, bolstering the cautious optimism. Reuters reported on Monday that China's Center for Disease Control and Prevention (CDC) stated, "China's current wave of COVID-19 infections is nearing an end, and there was no substantial increase in cases during the Lunar New Year break."

Earlier in the day, weak Australian Retail Sales for December and a cautious outlook ahead of the Federal Open Market Committee (FOMC) monetary policy meeting weighed on the AUD/USD exchange rate. Notable is the fact that Australian Retail Sales decreased 3.9% in December, compared to the predicted -0.3% decline and the prior figure of 1.9%.

S&P 500 Futures show modest gains despite Wall Street's disappointing performance, while 10-year Treasury rates fall to 3.54% following three consecutive days of advances.

The US Employment Cost Index (ECI) for the fourth quarter (Q4) and the Conference Board's Consumer Confidence index for January will be closely watched for immediate direction. According to the consensus of the market, the US Consumer mood index may increase, but a projected softer print of the US ECI, to 1.1% from 1.2%, might enhance the dovish attitude surrounding the Fed and can recall the AUD/USD purchasers.