- AUD/USD registers three-day losing streak.
- Global trade/political uncertainty, US-China tussle exert downside pressure on the pair.
- Recently upbeat Aussie/China data fail to please buyers during the key week.
AUD/USD trades near 0.6805 amid initial hours of Wednesday’s Asian session. The pair remains on the back foot as uncertainty surrounding the trade deal between the United States (US) and China joins the market’s cautious mood during the key week.
With the comments from the White House Adviser Larry Kudlow pouring cold water on the previous sentiment suggesting no US tariffs on China after the December 15 deadline, Aussie sellers stepped back. The pair earlier pulled back amid hopes of a phase-one deal after the Wall Street Journal (WSJ) reports.
Global markets remain jittery and the risk-tone stood compromised. The US 10-year treasury yields gained two basis points to 1.84% but global stocks failed to recover.
Recently released YouGov poll suggested a receding lead of the UK’s ruling Conservatives over the opposition Labour Party, which in turn exerted additional downside pressure on the risk tone.
On Tuesday, data from Australia and China also fell short of recalling the buyers as traders turn cautious ahead of the key central bank meetings from the US and Europe, general election in the United Kingdom (UK) and the US deadline to impose China tariffs.
Traders now look forward to Australia’s December month Westpac Consumer Sentiment details, expected -0.7% versus +4.5% prior, ahead of the US Federal Reserve (Fed) monetary policy meeting. Analysts at Westpac also doubt the latest reading and indicate a pullback while saying, “Australian consumer sentiment bounced 4.5% in November in the Westpac-Melbourne Institute survey (Dec survey due 10:30 am Sydney/7:30 am Singapore/HongKong), but this was after sentiment in October hit a low since 2015. At 97, the headline index is only modestly bearish.”
Given the absence of any trade directives off-late, a surprisingly upbeat Aussie data can trigger a pair’s pullback from 100-day Simple Moving Average (SMA) ahead of the Fed meeting.
Technical Analysis
Should the pair fails to bounce off a 100-day SMA level of 0.6806, November month low near 0.6750 will return to the charts. During the pair’s recovery, monthly top near 0.6865 will be the key to watch.
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