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  • AUD/USD corrected in North America as the day progressed, rallying from the New York morning session lows of 0.7199 to topple the 21-hr SMA at 0.7227 and settled for a close of 0.7228.  
  • AUD/USD corrected as the greenback came of its New York session scored highs of 97.50, closing at 97.33 and while US stocks ended the session higher, with the DJIA, (+0.44%), leading the benchmark triplets and moving back into positive territory for the year.
  • Despite President Trump’s latest threat to impose more tariffs on China and the conflicting comments from US and Chinese officials, the antipodeans managed to fend off the pressures from a higher greenback.  

AUD/USD had originally been sent lower from a late London high of 0.7250 as the dollar rallied across the board and went on to trade as low as a pip below the 0.72 handle; (The lowest level since 14th November). The commodity complex as a whole was in trouble overnight with WTI continuing to bleed which pressured the CRB index back below the 179 handle.  

The dollar has also been picking up the leftovers and fresh money flows from investor’s idle capital where there are little options left on the table considering the recent swell of risks coming to a head with the likes of the proposed trade meeting that is to take place between Xi and Trump this weekend.  

As analysts at Westpac pointed out, “conflicting statements from US and Chinese officials hit sentiment ahead of the key G20 meeting this weekend. China foreign ministry spokesman Geng Shuang said at a briefing that Trump and Xi had ‘agreed to reach mutually beneficial agreements’, sparking a rally in US equity futures,” giving rise to a bid in the Aussie overnight which managed to recover from 0.7199 to the 21-D SMA at 0.7227.  

As far as the dollar does, the DXY is now trading way above the 61.8% Fibo of the mid-Nov decline to recent lows at 96.04 at 97.06 and has penetrated the 78.6% Fibo at 97.34 where the index currently consolidates, having made a high of 97.50 overnight.  

Eyes on Federal Reserve’s Powell

The most immediate risk comes with Federal Reserve’s Powell speaking on the economy tonight as he makes an appearance at the Economic Club of New York. Traders will be looking to see if he bows to the recently less hawkish sentiment surrounding the Fed’s path of tightening considering the mounting pressures from such critics President Donald Trump, who have been calling for the Fed to slow its pace of rate hikes, concerned for the impact that higher rates of interest will have on not just the US, but the wider global economy.

AUD/USD levels  

Eyes are on the 0.73 handle  where sentiment for a trade war truce, as we already have seen from today’s correction, bulls are ready to pounce and aim for the 38.2% Fibo up at 07443 that meets the 200-D SMA.  First, the pair needs to cross the double top highs around 0.7275/80, (23.6% fibo level). 0.7338 was the 11-week high the guards a run towards the 200-D SMA at 0.7428. Meanwhile, the 10-D SMA is located at 0.7253 and while the price trades below it,   bears target  a move to 0.7164 recent lows that are guarding 0.7085 10th Sep lows. 0.7020 are the 2018 lows.