AUD/USD firms on the lower time frames despite contracting Chinese Manufacturing data

AUD/USD holds the support despite the Chinese data miss.

All eyes turn to the US Nonfarm Payrolls with attention paid to Ukraine and Russian peace talks.

Meanwhile, Chinese data has failed to move the needle in any significant way as traders get set for the Nonfarm Payrolls for the US session. At 0.7485, the price is a touch in the green and remains within a 0.7477 and 0.7500 range so far.

China's March Caixin Manufacturing PMI arrived at 48.1 vs. 49.7 expected and February‘s 50.4, showing that the country’s business conditions deteriorated amidst the latest covid outbreak last month. Prior to that, China's official Manufacturing PMI contracted to 49.5 in March from 50.2 booked in February and against the 49.9 expected, the National Bureau of Statistics (NBS) reported on Thursday.

Meanwhile, the focus has been on the Ukraine crisis with no meaningful resolution in sight. The dollar rose on Thursday as a lack of progress in peace talks between Russia and Ukraine boosted demand for the safe-haven currency. Peace talks resume today.

Additionally, month- and quarter-end flows have caused some additional volatility for markets, but trade is likely to muted ahead of Friday's US Nonfarm Payrolls figures, said Shaun Osborne, chief FX strategist at Scotiabank.

The NFP data are expected to continue reflecting healthy gains in employment growth in March and the Unemployment Rate is expected to come in lower.

''The historically tight labour market should continue to support average hourly earnings (Westpac f/c: 0.3%mth, 5.4% year),'' analysts at Westpac said.

Meanwhile, analysts at ANZ Bank explained that ''given the strength in the labour market and upward pressure on wages, the Feds expectation of a swift reduction in inflation to average levels in 2023 may be optimistic.''

''The Fed needs to target a reduction in demand in order to rein in surging inflation pressures, and that wont be easy at a time when supply-side pressures are continuing to add fuel to the inflation fire. Avoiding a hard landing will require expert judgment and no shortage of luck,'' the analysts argued.