AUD/USD clings to daily gains above 0.71 ahead of ISM non-manufacturing PMI

• US Dollar Index starts the week under pressure.
• Trade talks between the U.S. and China kick off.
• ISM non-manufacturing PMI is next from the U.S.

The AUD/USD pair started the week on a positive note and advanced to a fresh 2-week top at 0.7142 but failed to push higher as investors refrain from making large bets while waiting for headlines from the U.S. – China trade talks and the ISM non-manufacturing PMI data. As of writing, the pair was up 0.27% on a daily basis at 0.7135.

Today, Chinese and American officials will start mid-level trade talks, which will be important for the trade-sensitive AUD. Previewing this event, Danske Bank analysts said this week’s talks will probably pave the way for high-level negotiations  between President Trump and Chinese VP Qishan later this month at the World Economic Forum in Davos. In an interview with CNBC earlier this week, Commerce Secretary Wilbur Ross said that there was a very good chance of a “settlement with China on immediate trade.”

Meanwhile, the US Dollar Index continues to feel the pressure that was created by FOMC chairman Powell’s dovish remarks last week. Investors will be paying extra attention to today’s ISM non-manufacturing PMI to see if the downside risks to an economic slowdown have started to materialize.

Technical levels to consider