AUD/USD clings to gains near mid-0.7100s amid US-China trade optimism

   “¢   US-China trade optimism continues to underpin China-proxy Aussie.
   “¢   Bullish copper prices provide an additional boost and remain supportive.

The AUD/USD pair caught some fresh bids at the start of a new trading week and built on Friday’s goodish bounce from closer to weekly lows.  

Against the backdrop of Friday’s upbeat remarks by RBA Governor Lowe, saying that there may be a case for a higher interest rate if the jobless rate drops below the current level of 5%, the pair got an additional boost from the latest optimism over US-China trade talks.  

On Sunday, the US President Donald Trump said that he will delay increasing tariffs on Chinese goods on March 1, citing substantial progress in the US-China trade talks, and was seen as one of the key factors underpinning the China-proxy Australian Dollar.

This coupled with the ongoing bullish run in copper prices, which rose to the highest level since late-June 2018, further benefitted the commodity-linked Aussie and remained supportive of the pair’s goodish up-move for the second straight session.

Meanwhile, a subdued US Dollar demand, amid fading safe-haven demand and firming expectations that the Fed might refrain from raising interest rates in 2019 – reinforced by the recent slide in the US Treasury bond yields, did little to hinder the ongoing positive momentum.

It, however, remains to be seen if the pair is able to build on the positive momentum or meets with some fresh supply at higher levels as traders start repositioning for this week’s key event/data risks – including the Fed Chair Jerome Powell’s semiannual testimony and the closely watched US monthly jobs report (NFP).

Technical levels to watch