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  • AUD/USD reacts to the comments of Chinese diplomats, US President Trump.
  • Tensions between the US and North Korea, the Middle East seem largely ignored.
  • Thin market conditions, a lack of major data/events keep the hope of continuation in the trend.

AUD/USD seesaws around 0.6950, a level close to the highest since July 26, amid the initial Asian trading session on Friday. Chinese diplomat’s signal of nearness to phase-one signing and Santa-Claus rally by the US benchmarks are likely drivers to the market’s latest risk-on mood.

While the US President Donald Trump’s words that the US is “getting along with China” seem to have built the initial risk-on sentiment ahead of the Christmas, comments from China’s diplomats from Foreign Ministry and Commerce Ministry could have been the fuel to propel the latest run-up.

Additionally, the broad weakness of the US Dollar (USD) is likely another reason behind the Aussie pair’s rise to a multi-month high. An increase in the four-week average of the Initial Jobless Claims and a decline in MBA Mortgage Applications might have weakened the currency during the holiday-thinned trading session.

It’s worth mentioning that the political tension between the US and North Korea as well as the US and the Middle East are largely ignored. The US and North Korea are still fighting over denuclearization while captivating of the oil ships by the US-Saudi alliance is something that the Middle Ease members are hating. Wall Street benchmarks are again flashing the fresh record highs by the press time. Among them, Nasdaq’s touch to 9000 mark grabs the headlines off-late.

Moving on, the economic calendar is mostly silent with no major data/events scheduled for publishing. As a result, the year-end less liquid session is likely to prevail. However, optimism surrounding the US-China trade deal and the broad USD weakness could keep the commodity-linked currencies’ strength intact.

Technical Analysis

Unless breaking the 200-day Simple Moving Average (SMA) level of 0.6900, the pair is likely to head towards July 17 low nearing 0.7000 mark.