AUD/USD started out in the first trading day for the last month of the year with an opening gap to the upside following a temporary trade war truce between Beijing and Washington. AUD/USD is currently sitting in the 0.7370s, that’s up from Friday’s close of 0.7312. The question now is whether the truce can be sustained and how quickly can the two nations find a resolution to their dispute? AUD/USD is continuing within its comeback from the October lows, rallying in style from the last major supported area of 0.7221. AUD/USD has been bid following Federal Reserve’s Jerome Powell’s speech at the Economic Club of New York when he said: “interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy.” The street’s outlook for a slower pace of gradual hikes from the Fed was essentially confirmed last week, which has dented the progress that the greenback had been making on the 97 handle or late, sending the index from the 97.50s down to a recent low of 96.63. That initial sell-off gave the commodity complex a good foundation for a robust recovery and base metals rallied which in turn supported demand in AUD/USD. Focus then switched over to the highly anticipated dinner between Trump and Xi on the sidelines of the G20 summit over the weekend. While sentiment had been mixed leading into the meeting, making for a choppy and unpredictable end to the week in AUD/USD, Xi and Trump agreed to a trade war ceasefire. The truce has calmed the market’s fears that the feud between them was spiralling out of control of which had been threatening economic growth for the rest of the world – which was particularly worrisome for Australia – China’s is Australia’s largest trading partner. Trump said: “This was an amazing and productive meeting with unlimited possibilities for both the United States and China…It is my great honour to be working with President Xi.” “On trade, President Trump has agreed that on January 1, 2019, he will leave the tariffs on the $US200bn worth of product at the 10 per cent rate, and not raise it to 25 per cent at this time,” the White House said. Bulls not out of the woods yet However, the Export Council of Australia’s head of trade policy, Heath Baker, said the cooling of trade tensions was “a very good sign”, but big trading nations such as Australia were “not out of danger yet”. There are still plenty of stumbling blocks for the two sides to get over before markets can take a sigh of relief, and that should underpin the greenback and keep a lid on the Aussie. The trade truce, while a near-term positive for risk, when inspected throughoughly, doesn’t exactly see China making any meaningful concessions on technology – something that Trump needs to see. One of the biggest irritants in the US-China relationship has been Xi’s stated plan to develop Chinese hi-tech prowess to a level rivalling the US. Trump regards it as a threat to national security, accusing Beijing of stealing US technology – It is Chinas s called, 2025 plan – (However, Trump probably knew not to go there so soon, as it would have meant the breakdown of Sino-US trade negotiations before they even got started). AUD/USD levels AUD/USD broke Nov’s peak up at 0.7337 and is on the way to the 38.2% Fibo. The technical picture is leaning bullish as RSIs rise and the pair develops above 10 & 21-DMAs and daily cloud. The 200-D SMA at 0.7431 and confluence of the 38.2% Fibo of the 2018 highs to recent lows could be a tough nut to crack, as the fundamentals remain fragile. FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next AUD/JPY finds itself knocking on 84.00 after Monday bullish gap FX Street 4 years AUD/USD started out in the first trading day for the last month of the year with an opening gap to the upside following a temporary trade war truce between Beijing and Washington. AUD/USD is currently sitting in the 0.7370s, that's up from Friday's close of 0.7312. The question now is whether the truce can be sustained and how quickly can the two nations find a resolution to their dispute? AUD/USD is continuing within its comeback from the October lows, rallying in style from the last major supported area of 0.7221. 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