- US and China set to sign phase-one trade deal at 1630 GMT.
- US Treasury Sec. Mnuchin says tariffs could be removed under phase-two.
- USD weakness on Wednesday helps pair recover its losses.
The AUD/USD pair edged lower in the early trading hours of the European session and touched its worst level in five days at 0.6883. However, with the greenback struggling to find demand on Wednesday, the pair started to recover its losses and was last seen trading at 0.6894, erasing only 0.1% on a daily basis.
Trade headlines likely to drive AUD/USD action
Reports claiming that the US’ tariffs on Chinese imports could remain in place until after the 2020 election made it difficult for the China-proxy AUD to gather strength on Wednesday. Although Treasury Secretary Mnuchin noted that President Trump may consider lifting tariffs under the phase-two deal, investors don’t seem to be looking to make large bets before they see the details of the phase-one deal.
Sides are scheduled to sign the deal at a ceremony at 1630 GMT on Wednesday and the details of the agreement are expected to be released ahead of that event.
On the other hand, the upbeat performance of major European currencies keeps greenback’s gains in check with the US Dollar Index dropping to a fresh weekly low below the 97.30 mark and help the pair rebound from its daily lows. The US economic docket will feature the Producer Price Index (PPI) and the NY Empire State Manufacturing Index data.
Technical levels to watch for
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