- Weak US manufacturing data helped the Aussie to remain strong despite risk-off.
- Lack of scheduled events on economic calendar shifts the focus on qualitative catalysts with the US-China trade tensions being on the frontline.
With fewer fresh catalysts to follow, AUD/USD trades modestly unchanged to 0.6930 at the initial trading hours of the Asian session on Wednesday.
The pair did take advantage of soft manufacturing data from the US in order to register an uptick on Tuesday despite broader risk-off market sentiment.
Global risk barometer, the US 10-year treasury yield, dropped nearly 5 basis points to 2.27%, the lowest since October 2017 by the end of Tuesday while stretching losses overnight at the time of writing.
The much-anticipated reasons for the change in risk tone are the US traders’ reaction to the EU election and latest statements from the US President Donald Trump that signals additional problems for Chinese goods to arrive the US.
Investors remained clueless during early-day trading as no major data/events were up for release either from Australia or from the US while trade tensions remained in place.
Hence, political news and risk tone are likely to be a major driver of price change for the sessions to come.
Technical Analysis
Frequent pullbacks from 0.6940 indicate brighter chances for the pair’s U-turn towards 0.6900 and 0.6860 support with 2016 low near 0.6830 likely being in the bears’ radar then after.
Alternatively, an upside clearance of 0.6940 can question 0.7000 and 50-day simple moving average (SMA) level around 0.7040.
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