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  • AUD/USD remains on the back foot following the latest drop from 0.7185.
  • Friday’s consolidation extends to Monday, US dollar keeps the gains.
  • Sino-American tussle escalates as China retaliates to Trump administration’s sanctions, US Senators ready to re-discuss COVID-19 stimulus bill.
  • Australia’s NAB Business Confidence/Conditions to decorate calendar but risk catalysts to remain in the spotlight.

AUD/USD carries the previous day’s sober mood while taking rounds to 0.7150 at the start of Tuesday’s Asian session. The aussie pair stretched Friday’s losses to Monday as the US dollar remained on the front foot.

The major burden on the pair was a broad risk-off mood and market’s hope that the American policymakers will be able to break the stimulus deadlock. Further weighing on the quote were US President Donald Trump’s executive orders paving way for unemployment claims and pushing Democrats to return to the table.

Greenback’s recovery says it all…

Be it Friday’s upbeat US employment data or US President Trump’s executive orders, not to forget the market’s rush to risk-safety due to the recent risk-on the US dollar index (DXY) managed to cheer it all. The greenback gauge marked the second positive day following its bounce off the lowest in more than two years.

Republican leader Trump’s opening of the door for US jobless claims and other stimulus-related benefits pushed Democratic leaders to return on the negotiating table for coronavirus (COVID-19) aid package after calling it off the previous week. This marks the Republicans’ power and may result in the deal, which in turn helped the US dollar bulls to remain hopeful.

Elsewhere, China announced fresh sanctions on 11 of the US policymakers, including two senators, in retaliation to the similar move announced by America during the last week. Even so, the People’s Bank of China (PBOC) Governor Yi Gang said, “China will continue implementing the phase-one economic and trade agreement with the United States, while measures announced to open up china’s financial sector will continue.”

Furthermore, virus woes continue but the pace of increase in the new cases seems to have stabilized in the US, despite a surge in Victoria’s death toll to a record high of 300.

There were no major data on the economic calendar despite China’s inflation numbers, CPI 0.6% MoM against 0.4% previous and the US JOLTS Job Openings for June, 5.889M versus 4.91M forecast.

Against this backdrop market sentiment remains mixed as Wall Street benchmarks flashed mixed gains except for Nasdaq that had to bear the burden of tech shares’ declines. Further, the US 10-year Treasury yields gained 1.8 basis points to 0.58%.

Moving on, National Australia Bank’s (NAB) Business Confidence and Business Conditions, prior +1 and -7 respectively, may entertain intraday traders. However, major attention will be given to the risk catalysts including virus news, US-China tussle and American stimulus.

Technical analysis

Unless breaking an 11-week-old support line, at 0.7130 now, AUD/USD prices are less likely to revisit 0.7065/60 rest-zone, comprising July 24 low and June 10 high. However, the pair’s upside momentum seems lacking till it breaks an upwards sloping trend line from July 22, currently around 0.7260.