- Fading US-China trade optimism exerts some pressure on the China-proxy Aussie.
- Fed rate cuts kept the USD bulls on the defensive and helped limit deeper losses.
- Friday’s key focus remains on the closely watched US monthly jobs report for June.
The AUD/USD pair traded with a mild negative bias for the second consecutive session on Friday, albeit has still managed to hold its neck above the key 0.70 psychological mark.
After climbing to a two-month high of 0.7048 in the previous session, the pair witnessed a modest intraday pullback in what was seen as a delayed reaction to Thursday’s softer Australian retail sales figures for the month of May.
This coupled with fading optimism over a quick resolution to the prolonged US-China trade disputes undermined demand for the China-proxy Australian Dollar and collaborated to a follow-through downtick on Friday.
In the latest trade-related developments, reports suggested that China might not respect recently agreed trade truce unless the US removes punitive tariffs and lifts bans against Huawei and may withhold purchases of the US agricultural goods.
Meanwhile, the downside remained cushioned, at least for the time being, amid a subdued US Dollar price action and ahead of Friday’s important release of the closely watched US monthly jobs report – popularly known as NFP.
Firming expectations that the Fed will cut interest rates later this July kept the US Treasury bond yields depressed near multi-year lows, which eventually turned out to be one of the factors keeping the USD bulls on the defensive.
Hence, it would be prudent to wait for a strong follow-through selling before confirming that the recent corrective bounce might have already run out of the steam and the pair is all set to resume its prior/well-established bearish trajectory.
Technical levels to watch
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