AUD/USD pulls away from monthly highs, steadies near 0.6870

• Renewed trade optimism helps antipodeans gather strength.
• US Dollar Index makes a technical recovery on Monday.
• Market focus is likely to remain on trade headlines amid empty economic calendar.

The AUD/USD pair closed the previous week 80 pips higher and started the new week on a positive note boosted. After reaching its highest level since August 18th at 0.6881, the pair started to consolidate its daily gains and was last seen trading at 0.6866, adding 0.18% on a daily basis.

Eyes on US-China trade headlines

Heightened hopes of the United States (US) and China reaching a trade deal and avoiding a further escalation of the conflict seem to be helping the antipodeans such as the AUD and the NZD preserve their strength on Monday. Earlier in the day, White House economic adviser Kudlow said that they would call off December tariff hike if the phase-one trade talks were to continue to go well. Additionally, “trade deal with China is coming along great,” US President Donald Trump noted.

Reflecting the positive reaction to these comments, the 10-year US Treasury bond yield is adding more than 2% on Monday and Wall Street’s main indexes are looking to close the day in the positive territory.

This week’s macroeconomic calendar won’t be featuring any significant macroeconomic data releases from the US or Australia and the pair is likely to continue to react to US-China trade developments.

Mid-tier data releases from the US will include the IHS Markit’s preliminary Manufacturing and Services PMI on Tuesday and durable goods orders on Thursday.

Technical levels to watch for