AUD/USD advances to 0.6820 area as focus remains on US-China trade conflict

• Lack of clarity on US-China trade talks keep investors on edge.
• RBA reiterates readiness to ease policy further if needed.
• US Dollar Index moves sideways near 97.80 mark.

After dipping below the 0.6800 handle pressured by the Reserve Bank of Australia’s (RBA) policy remarks during the Asian session, the AUD/USD pair gained traction and was last seen trading at 0.6820, adding 0.2% on a daily basis. However, this move seems to be a technical correction in the absence of significant macroeconomic drivers.

The minutes from the RBA’s  November meeting showed that the board was prepared to ease the policy further if needed and agreed that an extended period of low interest rates would be required to meet  targets. On top of the uncertainty surrounding the United States (US)-China trade talks, the RBA’s dovish comments weighed on the AUD.

Focus remains on US-China trade dispute, FOMC minutes

Following CNBC’s report about China mulling the option to wait for the 2020 US presidential election before finalizing a trade agreement with the US, “During an entrepreneurship roundtable in Beijing, the two sides had apparent disagreements on the nature of trade relationship, with the US insisting that it hasn’t had enough benefits,” Chinese news outlet Global Times reported.  

On the other hand, the greenback stays relatively quiet as investors are waiting for the Federal Open Market Committee (FOMC) to release the minutes of its October meeting on Wednesday. As of writing, the US Dollar Index, which registered modest losses on Monday, was flat on the day at 97.80.

Technical levels to consider