AUD/USD drops to daily lows near 0.7040 on US-China trade headlines

• Bloomberg says the US will postpone Trump-Xi meeting to April.
• Mixed Chinese data weighs on the AUD in the Asian session.
• US Dollar Index recovers above 96.70.

The AUD/USD pair came under pressure during the Asian trading hours after the mixed data from China weighed on the antipodeans. Following a drop below the 0.7070 mark, the pair started to move sideways and spent the last couple of hours in a tight range before meeting a fresh selling wave. As of writing, the pair is trading at its lowest level of the day at 0.7043, losing 0.7% on a daily basis.

In the last hour, Bloomberg reported that the U.S. was considering to delay the meeting between President Trump and his Chinese counterpart and triggered a wave of risk-aversion. “Despite claims of progress in talks by both sides, a hoped-for summit at Trump’s Mar-a-Lago resort will now take place at the end of April if it happens at all, according to one of the people. China is pressing for a formal state visit rather than a lower-key appearance just to sign a trade deal, the person said,” Bloomberg reported.  

Earlier today, the  National Bureau of Statistics of China on Thursday reported that retail sales in January increased by 8.2% on a yearly basis to match December’s reading. On the other hand, industrial production in the same period expanded by 5.3% following December’s 5.7% and missed the market expectation of 5.5%.  

On the other hand, ahead of the weekly jobless claims and import/export price index data from the U.S., the US Dollar Index is staging a recovery after closing the last four days in the negative territory and keeping the bearish pressure on the pair intact. At the moment, the DXY is up 0.32% on the day at 96.78.

Technical levels to consider

The pair could meet the initial support at 0.7030 (Mar. 11 low) ahead of 0.7000 (psychological level/Mar. 8 low) and 0.6915 (Jan. 3 flash crash low). On the upside, resistances could be seen at 0.7100 (psychological level/daily high/20-DMA), 0.7135 (50-DMA) and 0.7195/0.7200 (Feb. 27 high/psychological level).