“¢ Escalating US-China trade tensions continue to dent the already weaker sentiment.
“¢ RBA rate cut speculations/prevailing risk-off mood does little to lend any support.
The AUD/USD pair extended its sideways consolidative price action through the Asian session on Thursday and remained confined in a narrow trading band below the 0.6900 handle.
The pair struggled to register any meaningful recovery and held well within the striking distance of multi-month lows amid growing concerns over a full-blown US-China trade war. Trade tensions between the world’s two largest economies escalated further on Wednesday following reports that the Trump administration is proposing to blacklist five Chinese companies.
This was followed by news that the US Treasury Secretary Steven Mnuchin has no plans to go to Beijing to resume the next round of trade negotiations and comments China’s foreign minister, saying that we will not accept unfair basis in talks with the US and will fight to the end if the US uses extreme pressure, which continued weighing on the China-proxy Australian Dollar.
Adding to this, growing bets that the RBA will eventually cut interest rates sooner rather than later further dented the already weaker sentiment surrounding the Aussie, with the Fed’s patient approach to rate-change and the prevailing risk-off mood lending some support to the US Dollar and doing little to impress the bulls or lend any support to the perceived riskier currency.
There isn’t any major market-moving economic data due for release on Thursday. Hence, the broader market risk sentiment and the USD price dynamics might act as key determinants of the pair’s momentum, albeit any meaningful recovery still seems elusive.
Technical levels to watch