AUD/USD struggles below mid-0.7100s amid caution over US-China trade talks

   •  Renewed uncertainty over US-China trade negotiations weighs on Aussie.
   •  Disappointing Chinese manufacturing PMI adds to the selling pressure.
   •  Subdued USD demand helped limit the downside ahead of US macro data.

The AUD/USD pair faded an early Asian spike to a session high level of 0.7166 and is currently placed at the lower end of its daily trading range.

Against the backdrop of Wednesday's not so optimistic trade-related comments by the US Trade Representative Robert Lighthizer, the pair was further weighed down by today's weaker than expected Chinese manufacturing PMI print for February. 

In his testimony to House Ways and Means Committee on Wednesday, Lighthizer said that it was too early to predict an outcome in U.S.-China trade negotiation and exerted some fresh downward pressure on the China-proxy Australian Dollar.

Meanwhile, dismal Chinese manufacturing data provided further evidence that US-Sino trade dispute was taking a toll on the global economic growth, which along with escalating geopolitical tensions between India and Pakistan further collaborated towards driving flows away from perceived riskier currencies - like the Aussie.

A fresh wave of global risk-aversion trade was evident from a sharp fall in the US Treasury bond yields, which failed to assist the US Dollar to build on the overnight bounce from three-week lows and helped limit deeper losses, at least for the time being. 

It, however, remains to be seen if the pair is able to attract any buying interest or continues with its lacklustre trading action as the focus now shifts to the US economic docket, highlighting the release of advance US Q4 GDP growth figures. 

This coupled with the release of the Fed's preferred measure of inflation - core PCE, and other second-tier US economic data might influence the USD price dynamics and further collaborate towards producing some meaningful trading opportunities later during the early North-American session.

Technical levels to watch