“¢ Resurfacing US-China trade tensions undermine China-proxy Aussie.
“¢ Resurgent USD demand further collaborates to cap gains/add pressure.
The AUD/USD pair faded a knee-jerk spike and quickly retreated around 35-40 pips in reaction to the latest trade-related headlines.
The pair spiked to an intraday high level of 0.7269 on the back of positive comments by China’s Foreign Ministry spokesman Geng Shuang, saying that Trump and Xi have agreed to reach mutually beneficial agreements.
The optimism quickly faded after the spokesman clarified that the agreement refers to Nov. 1st Trump-Xi phone call. This against the backdrop of the resurfacing US-China trade tensions and a goodish pickup in the US Dollar demand prompted some fresh selling at higher levels.
The US President Donald Trump’s latest threat to move ahead with raising tariffs on $200 billion in Chinese imports to 25% from 10% currently dampened hopes for a possible US-China trade deal at the upcoming G20 summit and dented sentiment surrounding the China-proxy Australian Dollar.
Meanwhile, a mixed performance in the commodity space did little to influence demand for commodity-linked currencies – like the Aussie, with the incoming trade-related headlines and the USD price dynamics turning out to be key determinants of the pair’s intraday volatile moves.
Moving ahead, today’s US economic docket, highlighting the release of Conference Board’s US consumer confidence index for Nov., along with speeches by various FOMC member will now be looked upon for some meaningful impetus and grab some short-term trading opportunities.
Technical levels to watch
A follow-through weakness below the 0.7225 immediate support is likely to accelerate the fall towards the 0.7200 handle before the pair eventually drops to test the 0.7170-65 region. On the flip side, the 0.7270-75 region now seems to have emerged as an immediate strong hurdle, above which the pair is likely to surpass the 0.7300 handle and aim towards testing the 0.7335-40 supply zone.
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