AUD/USD keeps marginal losses after above-forecast China PMI

• AUD/USD trades in the red near 0.7350 versus 0.7381 in early Asia. 
• China's NBS Manufacturing PMI bettered estimates to signal expansion in August. 
• Overbought AUD is struggling to cheer the upbeat China data. 

China's manufacturing sector unexpectedly expanded in August. So far, however, the data has failed to revive buying in the China-sensitive Aussie dollar. 

China's NBS Manufacturing PMI, which mainly focuses on state-owned enterprises, dropped to 51 in August from July's 51.1 reading. The actual reading, however, came in well above expectations for 48.7. A reading above 50 indicates expansion in the activity. 

The Non-Manufacturing PMI rose to 55.2 in August from July's 54.2 and bettered estimates for 52.1. 

The surprise expansion in the manufacturing sector adds credence to recent speculation about a faster-than-expected economic recovery in the world's second-largest economy. Also, it is a positive development for the base metals and industrial commodities like iron ore, one of Australia's key exports. 

Even so, the Aussie dollar is struggling to draw bids. In fact, the AUD/USD pair has declined by ten pips from 0.7357 to 0.7347, following the release of China's PMI data and is currently reporting a 0.2% decline on the day. The pair hit a multi-year high of 0.7381 early Monday. 

AUD/USD may witness a deeper decline during the day ahead as technical indicators are reporting overbought conditions. The AUD/USD pair has rallied by nearly 1,900 pips over the past 5-1/2 months. 

Dips, however, could be well supported, courtesy of Federal Reserve's latest decision to introduce inflation targeting, under which the central bank would allow inflation to run above the 2% target for some time before raising rates.

Technical levels