“¢ Escalating US-China trade tensions continue to undermine China-proxy Aussie.
“¢ The Australian Dollar was further weighed down by dismal domestic data.
“¢ A subdued USD demand might help limit any deeper losses, at least for now.
The Australian Dollar held on the defensive at the start of a new trading week, with the AUD/USD pair hanging within the striking distance of four-month lows set last week.
The pair failed to capitalize Friday’s modest uptick to levels beyond the key 0.70 psychological mark and came under some renewed selling pressure on Monday amid the latest escalation in the US-China trade conflicts.
The conflict between the world’s two biggest economies intensified further after the US raised tariffs on $200 billion worth of Chinese goods on Friday and was seen exerting some pressure on the China-proxy Australian Dollar.
The Aussie was further weighed down by an unexpected drop in the domestic home loans, which reaffirmed RBA’s concerns about consumer spending and prospects for an eventual rate cut in the second half of this year.
However, the US Dollar struggled near three-week lows amid a follow-through weakness in the US Treasury bond yields, especially after Friday’s softer US consumer inflation figures and might help limit any further losses.
In absence of any major market moving economic releases from the US, any incoming trade-related headlines and the USD price dynamics might act as key determinants of the pair’s momentum on the first day of a new week.
Technical levels to watch
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