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  • Renewed US-China trade uncertainty exerted some follow-through pressure.
  • Reviving safe-haven demand underpinned the USD and added to the selling bias.
  • Fed rate cut expectations might cap strong USD move up and limit the downside.

The AUD/USD pair maintained its offered tone through the early European session on Wednesday and is currently placed at the lower end of its daily trading range, around the 0.6840 region.
The pair witnessed some follow-through selling on Wednesday and retreated farther from over one-month tops set in the previous session amid renewed uncertainty about US-China trade talks. In the latest development, comments from the White House Economic Adviser suggested that unresolved trade issues during the initial talks could spill over into phase two.

Weighed down by renewed trade uncertainties/USD uptick

Adding to the pessimism was the news that the US Department of Commerce (DOC) has proposed antidumping duty (AD) and countervailing duty (CVD) investigations of imports of aluminium wire and cable from China. This coupled with a slight deterioration in the global risk sentiment exerted some additional downward pressure on the China-proxy Australian Dollar.
Meanwhile, the US Dollar benefitted from reviving demand for traditional safe-haven demand. However, expectations that the Fed will cut interest rates again at its upcoming meeting on October 29-30 should cap any strong USD gains and helped limit deeper losses, at least for the time being.
There isn’t any major market-moving US economic data due for releases on Wednesday. Hence, the broader market risk sentiment and the USD price dynamics might continue to act as key determinants of the pair’s momentum, or contribute towards producing some short-term trading opportunities.

Technical levels to watch