AUD/USD bounces off multi-month lows, still in the red below 0.6800 handle

• Growing concerns over a full-blown US-China trade war kept exerting some pressure.
• The USD recovers early lost ground on the back of slightly better wage growth data.
• Apart from trade-related headlines, investors now look forward to RBA policy meeting.

The AUD/USD pair dropped to fresh multi-month lows, around the 0.6760 region in the last hour, albeit quickly recovered few pips thereafter.

The pair extended its losing streak for the eleventh consecutive session – the longest since 2015, and lost some additional ground following the release of slightly better-than-expected US wage growth data, which helped the US Dollar to stall its corrective slide from two-year tops – set in the aftermath of a hawkish rate cut by the Fed.

With investors looking past Friday’s upbeat Aussie macro data – retail sales and PPI figures, renewed concerns of a full-blown trade war between the world’s two largest economies continued weighing on the China-proxy Australian Dollar and failed to assist the pair to register any meaningful recovery from the lowest level since early-Jan.  

The pair was further pressurized by South China Morning Post  (SCMP) news report, citing Chinese foreign ministry spokesman Hua Chunying, that the new US tariffs violated the agreement the sides had reached this week’s high-level talks and that China will not accept any form of pressure, intimidation or deception, and will not give an inch on important issues of principle.

The pair, however, found some respite after the US President Donald Trump, during an interview with CNBC, saying that they could delay or halt the imposition of tariffs if China “takes positive action, which helped limit further losses, at least for the time being, amid extremely oversold conditions.

It would now be interesting to see if the pair is able to attract any buying interest at lower levels or continues with its bearish trajectory as market participants now start positioning for next week’s RBA monetary policy update, scheduled to be announced during the Asian session on Tuesday.

Technical levels to watch