- AUD/USD printing fresh five-month highs through the 200-DMA.
- Phase-one trade deal in the making should underpin Aussie strength.
- USD/CNY fix continues to weigh on the currency below the 7 the figure, supporting AUD.
AUD/USD is taking on fresh highs above the 200-DMA in recent trade having moved up from a low of 0.6941 to a high of 0.6950 on solid fundamentals for the Aussie. AUD/USD can continue higher so long as a so-called ‘phase-one’ trade deal is signed in January between the US and China. The positive traction can be supportive of the commodity complex as world trade would be on improved foundations for which the Aussie trades as a proxy.
US/Sino trade deal in the making
The Chinese Foreign Ministry spokesman, Geng Shuang, said on Wednesday that officials from Beijing and Washington were in “close communication about detailed arrangements for the deal’s signing and other follow-up work.”
On Xmas Eve, President Trump said that the “deal is done, it’s just being translated right now,” adding that China’s leader, Xi Jinping, would hold a signing ceremony for the partial trade resolution in January.
“We’ll be having a quicker signing because we want to get it done.
However, further out, the Aussie economy is likely in need of a shot in the arm of QE which will be a dark cloud over any positive headlines on the trade front. Having said that, the recent jobs data and Chinese rade figures have been a pleasant and positive surprise, underpinning the Aussie at the time being. An attritional supportive factor has also been in today’s fix in the Chinese yuan – a stronger yuan is usually supportive of AUD. USD/CNY is trading back below 7.000 in decline.
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PBOC sets Yuan reference rate at 6.9879
AUD/USD levels
Valeria Bednarik, the Chief Analyst at FXStret, explained that the AUD/USD pair is poised to extend its gains, given that, in the 4-hour chart, a bullish 20 SMA continues to provide intraday support, while advancing above the larger ones:
Technical indicators lack directional strength, the Momentum just above its 100 line, but the RSI at around 75, skewing the risk to the upside. The pair has now room to test the 0.7000 threshold, with little chances of breaking through it on a first attempt.
- AUD/USD Price Forecast 2020: May the aussie live in interesting times
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