AUD/USD recovers early lost ground to sub-0.6700s, near 3-week lows

• Intensifying US-China trade war fears continued exerting some pressure on Monday.
• Positive trade-related comments by China’s Vice Premier helped reverse an early dip.
• Investors now look forward to the US durable goods orders data for a fresh impetus.

The AUD/USD pair quickly reversed an early dip back closer to multi-year lows and is currently placed at the top end of its daily trading range, just below mid-0.6700s.
 
The pair added to last week’s modest losses and opened with a bearish gap at the start of a new trading week in reaction to the US President Donald Trump’s late announcement on Friday to raise existing tariffs on $250 billion worth of Chinese goods to 30% from 25% as of October.  This came after China earlier on Friday announced retaliatory tariffs on USD 75B US imports and kept exerting some downward pressure on the China-proxy Australian Dollar.

Positive trade-related comments helped bounce off lows

Meanwhile, concerns over US-China trade war eased a bit after China’s Vice Premier Liu He said China is willing to resolve trade issues with the US via claim negotiations. However, the prevalent risk-aversion mood, as depicted by a sea of red across global equities, held investors from buying perceived riskier currencies – like the Aussie – and kept a lid on any strong follow-through recovery amid a modest US Dollar uptick.
 
Apart from any fresh trade-related developments, Monday’s US economic docket – highlighting the release of durable goods orders data – will now be looked upon for some short-term trading impetus. This followed by a batch of US economic data this week – including a revised estimate of the second-quarter GDP growth figures on Thursday – might now play a key role in determining the pair’s next leg of a directional move.

Technical levels to watch