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  • AUD/USD consolidates from 0.7402 after rising the highest since August 2018.
  • Sino-American tension weighs on market sentiment after the initial show of optimism on vaccine hopes.
  • US dollar weakness keeps the buyers hopeful ahead of a busy day.
  • Second-tier Aussie data will travel through China Caixin PMI to reach RBA.

AUD/USD drops to 0.7375 at the start of Tuesday’s Australian session. The aussie major surged to the 24-month high the previous day but corrected afterward amid a light calendar and risk reset. Those weighing on the quote could take clues from the US-China tension while the US dollar weakness and mild optimism on the floor kept the downside limited ahead of the key day.

Many turn ahead of RBA, risk dwindles…

Global markets paused the previous show of optimism amid a light calendar and a lack of major data/events on Monday. However, calls that China has the power to ease the American pressure off TikTok joins uncertainty surrounding the US stimulus to drag the quote back below 0.7400.

Recently, US Treasury Secretary Steve Mnuchin blamed, while speaking in the Fox Business interview, House Speak Nancy Pelosi and the Democratic Leader of the Senate Chuck Schumer for the deadlock. Even so, the diplomat said to discuss the much-awaited aid package with the Senate Republican leader Mitch McConnell and other party members.

Elsewhere, the coronavirus (COVID-19) numbers from the US and Australia joined hopes of an early vaccine to keep the risk-takers on the table. Though, the surge in the global count kept the optimism tamed.

Talking about the data, Australia’s TD Securities inflation and Q2 Company Gross Operating Profits preceded China’s NBS Manufacturing PMI to stay away from any major disappointment. However, the mixed readings from the US join comments from the Fed Governor Richard Clarida to offer a sluggish start to the week.

Moving on, Australia’s AiG Performance of Mfg Index and Commonwealth Bank Manufacturing PMI will direct the immediate market moves ahead of the Aussie Building Permits, China’s Caixin Manufacturing PMI and the RBA. While scheduled PMIs are likely to remain around the previous levels, the RBA statement will be the key considering the latest recovery in virus numbers. It should be noted that the Aussie central bank isn’t expected to alter the current monetary policy and the benchmark interest rate of 0.25%.

Other than the scheduled data/events, traders will have to keep eyes on the key risk catalysts like virus headlines, trade news and stimulus updates for fresh impetus during the busy day. Given the likeliness of upbeat outcomes from the slated factors, the AUD/USD may regain its power past-0.7400 should RBA refrains from any surprises.

Technical analysis

Failures to stay strong beyond 0.7400 indicate brighter chances of the pair’s pullback to January 2019 top surrounding 0.7300 amid overbought RSI conditions. Alternatively, the August 2018 high near 0.7455 will question the immediate upside ahead of July 2018 peak close to 0.7485.


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