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  • AUD/USD struggles to gain traction after the largest loses since the month’s start.
  • Risk sentiment dwindles amid mixed news from trade/Brexit.
  • Fedspeak, trade headlines can offer immediate direction amid a light economic calendar.

While contrasting fundamentals between the US and Australia dragged the AUD/USD pair downwards during initial part of the previous day, mixed trade headlines from the United States (US) pleased Aussie sellers afterward. With no recent major catalysts, the quote seesaws around 0.6817 by the press time of early Friday morning in Asia.

The US activity numbers contrasted with Australian Purchasing Managers Index (PMI) figures during Thursday and managed to strengthen the US Dollar (USD) across the board. The sentiment was also supported by mixed comments concerning China from the US diplomats, namely the US President Donald Trump’s Adviser Peter Navarro and Vice President Mike Pence.

Bears got additional support from the uncertainty surrounding Brexit and increasing odds for a rate cut by the Reserve Bank of Australia on its November 05 monetary policy meeting. “Markets are pricing 5bp of easing at the 5 Nov RBA meeting, and a terminal rate of 0.48% (RBA cash rate currently at 0.75%),” says Westpac. The price of Iron Ore, the key export item for Australia, also weakened and amplified the downpour.

While the economic calendar has no major directives to follow, comments from the President and Chief Executive Officer of the  Federal Reserve Bank of New York John C Williams could offer immediate signal to prices. However, trade/Brexit will keep their importance as main market drivers.

During the US session, the Michigan Consumer Sentiment Index for October, expected to remain unchanged at 96, will be in the spotlight amid a lack of data.

Technical Analysis

Unless closing below late-September highs, also near to 21-day Exponential Moving Average (EMA), surrounding 0.6800, prices are less likely to revisit 0.6775 and 0.6700 support levels. However, the monthly top close to 0.6885, followed by September high of 0.6895 and July 10 low of 0.6910 could keep the upside under check.