AUD/USD clings to modest gains, just below mid-0.6700s post-Chinese PMI

• The pair regains traction in the wake of positive trade-related headlines.
• Disappointing release of Services PMI from China does little to influence.
• The key focus remains on the outcome of US-China trade negotiations.

The AUD/USD pair ticked higher during the Asian session on Tuesday and seemed rather unaffected by the disappointing release of Chinese Services PMI.
 
The privately conducted PMI survey showed that growth in China’s services sector unexpectedly decelerated to 51.3 in September as compared to a rise to 52.9 expected from 52.1 recorded in the previous month. The data, however, did little to influence the China-proxy Australian Dollar, which remained supported by the overnight positive remarks by White House economic adviser Larry Kudlow.

Renewed trade optimism supportive

Kudlow’s remarks on Monday helped ease some anxiety led by earlier reports that Chinese officials were increasingly reluctant to agree to a broad trade deal pursued by US President Donald Trump. Kudlow said that the United States was open to looking at China’s proposals and added that the US and Chinese trade negotiators could make progress.
 
Currently hovering around the 0.6740 region, the pair has managed to recover a part of the previous session’s modest downtick but lacked any strong follow-through as traders now seemed reluctant to place any aggressive bets and might prefer to wait on the sidelines ahead of the highly-anticipated US-China trade negotiations in Washington, starting this Thursday.
 
In the meantime, Tuesday’s US economic docket, highlighting the release of Producer Price Index (PPI), will be looked upon for some short-term trading impetus later during the early North-American session.

Technical levels to watch