- Souring market sentiment weighs on AUD in NA session.
- US Dollar Index steadies near 98 on Tuesday.
- Trade war doesn’t seem to be hurting consumer confidence in US.
After testing the 0.67 handle on Monday, the AUD/USD pair staged a decisive recovery and returned to its comfort zone of 0.6730 – 0.6800. With the trading action remaining subdued on Tuesday, the pair struggled to find direction and is now trading at 0.6756, losing 0.25% on a daily basis.
RBA commentary weighs on AUD
Speaking at the Economic Society of Australia Luncheon, in Canberra, earlier today, Reserve Bank of Australia (RBA) Deputy Governor Debelle said that threats to the free trade system were posing significant risks to the economy. Commenting on the AUD’s market valuation, Debelle said that the currency’s devaluation could continue, making it difficult for the Aussie to find demand despite easing concerns over a prolonged US-China trade conflict.
In the second half of the day, the US Treasury bond yields turned south and the yield on the 30-year T-bond fell below the 3-month yield for the first time in 12 years, reviving fears of a recession in the US and forced investors to stay away from risk-sensitive assets.
Meanwhile, today’s data from the US showed that consumer confidence stayed relatively upbeat in August despite the ongoing trade war with China and helped the Greenback preserve its strength regardless of slumping T-bond yields. The Conference Board’s Consumer Confidence Index came in at 135.1 in August and surpassed the market expectation of 129.5. As we approach the end of the day, the US Dollar Index is moving sideways near the 98 mark.
During the Asian trading hours on Wednesday, the Australian Bureau of Statistics will release the Construction Work Done data, which is unlikely to have a significant impact on the pair’s action.
Technical levels to watch for
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