- Not so encouraging trade headlines kept exerting some pressure on Friday.
- Sliding US bond yields undermined the USD and helped rebound from lows.
The AUD/USD pair gained some positive traction at the start of a new trading week and recovered a part of Friday’s slide to over two-week lows.
The pair extended its recent rejection slide from the vicinity of the 0.6900 handle and remained under some selling pressure for the third consecutive session on Friday amid not so encouraging trade-related headlines, wherein the US President Donald Trump said that he is not interested in making a “limited” trade deal with China.
US-China trade pessimism to cap gains
This was followed by news that China’s trade delegation cancelled a visit to the US farms and left earlier than planned. The latest development might have dampened prospects for an interim trade deal between the world’s two largest economies and continued weighing on the China-proxy Australian Dollar.
This coupled with fears of a further escalation of geopolitical tensions in the Middle East further soured the global risk sentiment and weighed on perceived riskier currencies – like the Aussie. However, a sharp slide in the US Treasury bond yields kept the US Dollar bulls on the defensive and extended some support to the major.
On the economic data front, Monday’s weaker Australian manufacturing PMI prints, drifting into the contraction territory in September, was largely offset by a strong rebound in the services sector activity and did little to influence the price-action, albeit remained supportive of the modest intraday bounce from slightly oversold conditions.
It will now be interesting to see if the pair is able to capitalize on the recovery move or runs into some fresh supply at higher levels as market participants now look forward to scheduled speeches by influential FOMC members – New York Fed President John Williams and St. Louis Fed President James Bullard – for some impetus.
Technical levels to watch
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