AUDUSD traders are trying to sort out the many incoming news and data that are signaling different directions for the price. The debt ceiling crisis is almost over after yesterday’s House votes. China’s official PMI fell to 48.8 from 49.2, but today, the Caixin PMI rose to 50.9 from 49.5, causing uncertainty about which to follow. One thing is for sure: China’s recovery is not as fast as everyone had hoped.

FED members are also giving mixed signals. There has been much hawkish talk about raising rates in the last few weeks, but yesterday, both Jefferson and Harker signaled that a pause is more likely for the June meeting. The market is now pricing in a 25 basis points hike with nearly a 40% probability.

Yesterday, the Chicago PMI data delivered a big negative surprise, falling to 40.4 from 48.6. The expectation was for it to fall to 47.3. After the significant negative surprise, traders should be careful about today’s much more impactful ISM manufacturing data. Chicago PMI and ISM manufacturing have a very high correlation and usually act together. Because of that, today’s ISM might also have a negative surprise, but a much smaller one. Despite the high correlation, however, there have been many times when the two data series diverged in the short term but continued to have a similar trend. This means that a negative surprise is not guaranteed but has a high probability. This could be a positive, at least for today, for AUDUSD if the correlation holds. However, after today, Friday’s nonfarm payrolls change will be the main event for this week and probably for the next week as well.

With tons of incoming data confusing traders, the downtrend from 2021 is still ongoing for AUDUSD. The recent surge of the dollar index caused the price to fall below 0.655. If AUDUSD can recover and reclaim this key level after the positive Caixin PMI data from China, there could be hope for a positive correction. However, as long as the resistance holds, the downward moves might extend to the lower line of the trend channel, which is currently at 0.6325 and falling.