AUD/USD: Bid tone intact despite below-forecast China Caixin PMI

• AUD/USD keeps the gains despite weak China Caixin PMI. 
• The AUD is drawing bids amid signs of risk recovery in the equity markets.
• Both the RBA and the Fed are expected to cut rates in March.

AUD/USD continues to trade in the green as risk recovery is overshadowing the below-forecast China data released soon before press time. 

China's Caixin manufacturing purchasing managers’ index (PMI), which surveys small and medium-sized export-oriented units, came in at 40.3, missing the forecast of 45.7 by a big margin and down from January's 51.7.

The data has come two days after the government reported its official PMI at a record low of 35.7 in February from 50.0 in January. A weaker-than-expected print was expected as the coronavirus outbreak has disrupted logistics and supply chains. 

As a result, the Aussie dollar is showing resilience. The AUD/USD pair continues to trade at session highs above 0.6520, having opened at 0.6465 in early Asia. 

The pair's ability to keep gains despite weak data could be associated with the recovery in the US stock futures. The S&P 500 futures are now reporting a 0.12% gain as opposed to a 1.3% drop seen two hours ago.  The Shanghai Composite index is also reporting a 1% gain. 

The risk recovery looks to have been fueled by dovish central bank expectations. The US Federal Reserve is expected to cut rates by 25 basis points in March and April. The markets are also pricing a rate cut by the Reserve Bank of Australia on Tuesday. 

Meanwhile, Bank of Japan's governor Kuroda was out on the wires a few minutes ago stating that the central bank is closely monitoring future developments, and will strive to provide ample liquidity and ensure stability in financial markets through appropriate operations and asset purchases.

Technical levels