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  • AUD/USD remains on the backfoot after stepping back from the eight-week top the previous day.
  • China’s October month inflation numbers print lesser than forecast figures.
  • Trading sentiment dwindles after vaccine hopes propelled equities, US dollar the previous day.
  • Trade war, Sino-US tussle and American politics can offer immediate trade directions.

AUD/USD wavers around 0.7280/75 after China published weaker than expected inflation data for October during early Tuesday. Although the aussie pair pays a little heed to the downbeat China Consumer Price Index (CPI) and Producer Price Index (PPI), challenges to the risk seem to weigh on the quote off-late.

China’s headline CPI eased below 0.8% forecast to 0.5% YoY, marking the first below 1.0% print since March 2017, whereas PPI reprints -2.1% figures while defying -2.0% market consensus. Earlier in the day, October month data from National Australia Bank (NAB) marked better than previous readouts but were mostly ignored.

Read: Chinese CPI below 1% YoY first time since March 2017

Having earlier cheered the hopes of the coronavirus (COVID-19), market mood sours off-late as the US sanctions four Chinese diplomats over the Hong Kong crackdown, per Reuters. Also weighing on the quote could be the American dislike, as expressed by the US Trade Representative (USTR) Robert Lighthizer, concerning the European tariffs on goods worth $4 billion. Furthermore, the UK government’s failure to convince the House of Lords over the necessity to have the rights to edit the Brexit treaty by the Tory members also weighs on the risks.

Meanwhile, vaccine hopes get additional fuel as US Health Official Dr. Anthony Fauci said that the vaccine is around the corner while terming Moderna’s vaccine for covid similar to Pfizer’s during an interview with CNN.

It should also be noted that the Aussie Prime Minister Scott Morrison recently crossed wired via Reuters while saying, “Confidence is returning, Australia is re-opening.”

Amid these plays, S&P 500 Futures seesaw around the mid-3,500 area following its run-up to the record high on Monday. Though, Australia’s ASX 200 and Japan’s Nikkei 225 gain over 1.0% to challenge the bears.

Given the lack of major data/events left for publishing on the economic calendar, AUD/USD traders will keep eyes on the risk catalysts, stated above, for fresh trading impetus.

Technical analysis

October high and 50-day SMA, respectively around 0.7240 and 0.7175, offers strong support for the AUD/USD bears to watch unless the quote crosses the mid-September high of 0.7346.