Search ForexCrunch

   “¢   RBA rate cut speculations/disappointing domestic data weigh on the Aussie.
   “¢   A further escalation in the US-China trade tensions does little to lend support.
   “¢   A subdued USD demand helped limit losses ahead of FOMC meeting minutes.

The AUD/USD pair struggled below the 0.6900 handle through the Asian session on Wednesday and remained well within the striking distance of multi-month lows.

With investors looking past a surprise election victory for the incumbent Aussie PM Scott Morrison, the Australian Dollar came under some intense selling pressure on Tuesday after the latest RBA policy meeting minutes revealed that the central bank is willing to cut benchmark interest rates.  

Apart from growing bets over an eventual RBA rate cut, the domestic currency was further weighed down by Wednesday’s disappointing release of Australian construction data – showing a contraction of 1.9% in the first three months of 2019 as against expectations for a no change.

The already weaker sentiment deteriorated further on reports that the Trump administration could blacklist Chinese surveillance technology firm – Hikvision and is also considering cutting off the flow of vital American technology to as many as five Chinese companies.

The news added to the recent escalation in the US-China trade tensions and weighed on investors’ risk sentiment, doing little to lend any support to the China-proxy Australian Dollar or provide any immediate respite to the perceived riskier currency.  

Meanwhile, a subdued US Dollar price action, consolidating the recent strong gains to multi-week tops, seemed to be the only factor helping limit further downside ahead of today’s key risk – the release of minutes from the latest FOMC monetary policy meeting, due later during the US session.

Technical levels to watch