AUD/USD clings to modest recovery gains from over 2-week lows

   “¢   Kudlow’s comments revive US-China trade optimism and helped regain traction.
   “¢   Subdued USD demand, amid dovish Fed expectations, extends additional support.

The AUD/USD pair caught some bids during the Asian session on Wednesday and recovered a part of the previous session’s slide to over two-week lows.  

Against the backdrop of risk-off mood led by concerns over slowing global growth, resurfacing trade tensions further dampened investors’ risk-appetite and continued driving flows away from perceived riskier currencies – like the Aussie through Tuesday’s trading session.

News reports on Tuesday suggested that the US has turned down an offer of a preparatory trade meeting with Chinese counterparts due to outstanding disagreements between the two sides over the enforcement of intellectual property rules.

However, a clarification by White House economic advisor Larry Kudlow, saying that reports about the US cancelling a trade planning with China were “not true”, extended some support and assisted the China-proxy Aussie to snap three consecutive days of losing streak.

Currently hovering around the 0.7135-40 region, testing session tops, the uptick was further supported by a subdued US Dollar price action, which held on the defensive amid the partial US government shutdown and dovish Fed expectations.

In absence of any major market moving economic releases from the US, the pair remains at the mercy of broader market risk-sentiment and the USD price dynamics ahead of Thursday’s important release of Aussie employment details.

Technical levels to watch