AUD/USD slumps to two-week lows near 0.6820 as investors wait for Powell’s testimony

• Trade uncertainty weighs on the AUD on Wednesday.
• US Dollar Index continues to move sideways below 98.50.
• Coming up: FOMC Chairman Powell to testify before Congress.

The AUD/USD pair spiked to a session high of 0.6857 in the early trading hours of the Asian session supported by a sharp upsurge witnessed in the positively-correlated NZD//USD pair following the Reserve Bank of New Zealand’s surprise decision to keep its policy rate unchanged.

Trade uncertainty hurts the AUD

However, with the resurfacing worries over the United States (US)-China trade conflict making it difficult for the AUD to preserve its strength, the pair reversed its direction in the early trading hours of the European session and slumped to its lowest level in two weeks at 0.6823. As of writing, the pair was trading at 0.6830, down 0.15% on a daily basis.

Earlier in the day, the data from Australia showed that the wage inflation, as measured by the Wage Price Index, remained steady at 0.5% on a quarterly basis in the third quarter and was largely ignored by the participants.

While speaking at the Economic Club of New York on Tuesday, US President Donald Trump noted that they will be raising tariffs on Chinese imports ‘substantially’ if they fail to reach a deal with China.

In the second half of the day, markets will be paying close attention fo the Federal Open Market Committee (FOMC) Chairman Jerome Powell’s testimony before  the Joint Economic Committee of the US Congress. The US economic docket will also include the October inflation report, which is expected to show the core Consumer Price Index (CPI) stay unchanged at 2.4% on a yearly basis.

Technical levels to watch for