- RBA’s downbeat tone prompted some fresh selling around the Aussie.
- Scepticism over future US-China trade relations added to the selling bias.
- A modest pickup in the USD demand further contributed to the downfall.
The AUD/USD pair came under some renewed selling pressure on Tuesday and dropped to near one-week lows, closer to mid-0.6800s in the last hour.
The pair failed to capitalize on the overnight attempted recovery, rather met with some fresh supply after the Reserve Bank of Australia (RBA) showed readiness to cut interest rates further as early as in February.
Minutes of the RBA December policy meeting out this Tuesday showed that policymaker took note of the gloomy mood among consumers and remained concerns that wage growth was too weak to revive either inflation.
This coupled with some scepticism over the future trade relations between the US and China further dented the already weaker sentiment surrounding the China-proxy Australian dollar and collaborated to the pair’s downfall.
It is worth recalling that the world’s two largest economies struck an interim trade deal last week, where in the US will reduce some tariffs on Chinese goods in exchange for increased Chinese purchases of some US goods.
However, the lack of details kept a lid on the latest optimism and was evident from the prevalent cautious mood. This coupled with a modest US dollar rebound further weighed on perceived riskier currencies, including the Aussie.
It will now be interesting to see if the pair is able to attract any dip-buying interest at lower levels or the current pullback marks the end of the recent positive move amid absent relevant market moving economic releases from the US.
Technical levels to watch
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