- US-China trade concerns continue to weigh on the Aussie.
- Disappointing domestic data further adds to the selling bias.
- Now seems vulnerable amid a pickup in the USD demand.
The AUD/USD pair extended its steady intraday slide and is currently placed at the lower end of its daily trading range – below mid-0.6700s.
After an initial uptick to an intraday high level of 0.6762, the pair met with some fresh supply and turned lower for the second consecutive session – also marking its fourth day of a downtick in the previous five – following the release of dismal Aussie construction data.
Dovish RBA expectations exert fresh pressure
Following a 1.9% contraction in the first quarter of 2019, construction work done fell 3.8% during the second quarter – the largest contraction since the fourth quarter of 2017 – and reinforced market speculations for a further monetary easing by the RBA later this year.
Against the backdrop of fading optimism over a quick resolution of the prolonged US-China trade disputes, dovish RBA expectations exerted some fresh downward pressure on the China-proxy Australian Dollar amid a modest pickup in the US Dollar demand.
Despite the fact that the US bond yield curve inversion deepened to the lowest level since 2007 on Tuesday amid growing concerns about global economic growth, the greenback managed to find some traction and was being supported by the overnight upbeat release of US consumer confidence data.
In absence of any major market-moving economic releases from the US, it will be interesting to see if the pair is able to attract any buying interest at lower levels or the current pullback marks the resumption of the prior/well-established bearish trend, back towards testing sub-0.6700 level or multi-year lows.
Technical levels to watch
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