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  • AUD/USD followed the likes of other commodity-linked currencies to begin in 2020.
  • Market’s risk tone also deteriorated despite trade optimism.
  • Greenback ignored mixed data while marking broad recovery.

AUD/USD is bouncing off to 0.6990 amid the early Friday morning in Asia. The pair seems to consolidate the latest losses without any major driver. The quote dropped the previous day after the US dollar (USD) registered broad gains amid the year-start sparse trading conditions.

Additionally, the Aussie pair also ignored optimism surrounding the US-China trade relations as the two are near to the signing ceremony for the phase-one deal and cheering odds for the phase-two. Even so, The Hill came out with the news raising doubts over the smooth running of the phase-two discussions.

Elsewhere, the US-Middle East tension prevailed amid calls of Iran or its allied groups are an attack on US interests pushed the Defence Secretary Mark Esper to adopt a tough tone. Even so, US President Donald Trump turned down the Turkish proposal to intervene much in Libya.

That said, the market’s risk tone stayed a bit compressed with the US 10-year treasury yields losing nearly 35 basis points to 1.875% by the press time whereas Wall Street holding the head high at the year-start trading.

On the economic front, US Markit Manufacturing PMI and Initial Jobless Claims flashed mixed results, which in turn increase the importance of today’s ISM Manufacturing PMI and FOMC minutes. Further, China’s Caixin Manufacturing PMI slipped below expectations and prior to 51.5 but marked fifth consecutive reading beyond 50.00.

Given Japan’s off for the week, coupled with an empty economic calendar in Asia, traders will have a little guidance and hence might carry the previous trend ahead of the likely active US session.

Technical Analysis

Prices need to close below four-month-old resistance-turned-support, at 0.6978, to revisit mid-December high near 0.6940. In absence of which, buyers can keep looking towards 0.7050 and July tops near 0.7085 during the pullback.