- China signals fresh fiscal stimulus for its slowing economy and lends some support.
- A follow-through rally in the US bond yields underpins the USD and cap any up-move.
The AUD/USD pair lacked any firm directional bias and seesawed between tepid gains/minor losses through the early North-American session.
Having dropped to over one-week lows earlier on Tuesday, the pair now seems to have entered a bearish consolidation phase and was seen oscillating in a narrow trading band around mid-0.6900s.
China’s efforts to bolster economic growth – by allowing local governments to use proceeds from special bonds as capital for major investment projects, extended some support to the China-proxy Aussie.
The positive factor, to a larger extent, was offset by a mildly positive tone surrounding the US Dollar, which remained supported by a follow-through recovery in the US Treasury bond yields.
Meanwhile, market participants remained convinced that the Fed will need to cut rates sooner rather than later amid the ongoing US-China trade tensions and a series of weak domestic macro data.
The latest disappointment from the annual US PPI figures further reinforced the market expectations, which kept a lid on any strong follow-through USD uptick and further collaborated to the subdued trading action.
Moving ahead, Wednesday’s scheduled speech by RBA Assistant Governor Christopher Kent, followed by the release of Westpac’s Aussie Consumer Sentiment Index and Chinese inflation figures will now be looked upon for a fresh impetus.
Technical levels to watch
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