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  • Aussie weighed down by reports that China wants a narrower trade deal.
  • Focus shifts to Powell’s speech amid holiday-thinned markets.

The  AUD/USD  pair is seen consolidating the early-Asian drop below the midpoint of the 0.67 handle, as the sentiment around the Aussie dollar remains dented by the fresh jitters concerning the US-China trade front.

US-China trade-related news to drive markets this week

Bloomberg quoted sources with the knowledge of the discussion late-Sunday, citing that China’s Vice Premier Liu He, who will lead the Chinese contingent in high-level talks that begin Thursday, told visiting dignitaries he would bring an offer to the US that won’t include commitments on reforming Chinese industrial policy or the government subsidies that have been the target of longstanding US complaints.

China’s likely offer of limited scope on trade talks refueled trade war fears and weighed negatively on the risk sentiment, with the US equity futures knocked down alongside the China proxies, the AUD and the Kiwi.

However, the downside remains limited as the US dollar holds the lower ground vs. its main competitor seen over the last week, induced by a series of downbeat US fundamentals that intensified US recession fears.

The moves in the spot are also limited probably due to public holidays in Australia and China, with slowing volumes and minimal volatility. Therefore, all eyes remain on the US Federal Reserve (Fed) President Powell’s speech due later today in the NA session at 1700 GMT for fresh direction on the prices.

AUD/USD Technical levels to watch