- Aussie lifted by US-China trade deal hopes-led risk-on amid full markets.
- Downbeat China Caixin Services PMI ignored, as focus shifts to US data, Powell.
The AUD/USD pair found support once again at Monday’s low of 0.6729 and staged a solid comeback from there, now looking to extend the bounce above the 0.6750 level amid a return of the full markets.
US-China trade optimism boosts risk
The higher-yielding and China proxy, the Aussie dollar, was lifted by the risk-on action in the Asian equities and US equity futures, as markets remain hopeful that the US-China trade talks due later this week will be successful.
This comes after the White House Adviser Kudlow said that it was possible to see progress made this week. Meanwhile, the US President Trump’s upbeat comments on trade also helped the bulls. Trump noted: “We think there’s a chance we could do something very substantial.”
Adding to the recovery in the spot, the US dollar remains broadly weaker amid reduced safe-haven flows while the Aussie cheered an uptick in the NAB Business Conditions data and shrugged-off the dismal Chinese Caixin Services PMI data. The Chinese Services sector activity declined to 51.3 in September vs. 52.9 expected and 52.1 last.
Attention now turns towards the US Producer Price Index (PPI) and Fed Chair Powell’s speech for fresh trading impulse. Meanwhile, any development on the US-China trade front will emerge as the main driver for the pair.
AUD/USD Technical levels to watch