- Renewed US-China trade uncertainty continued weighing on the Aussie.
- Dovish sounding RBA meeting minutes added to the intraday selling bias.
- A subdued USD demand helped limit deeper losses/bounce off daily lows.
The AUD/USD pair has managed to recover a part of its early lost ground, with bulls now looking to extend the momentum further beyond the 0.6800 handle.
The pair added to the previous session’s modest losses and witnessed some follow-through selling during the Asian session on Tuesday following the release of minutes from the latest Reserve Bank of Australia (RBA) monetary policy meeting.
Focus remains on trade developments
The Australian central bank maintained its dovish outlook and showed readiness to cut interest further. This came on the back of receding hopes for a preliminary US-China trade deal and weighed on the China-proxy Australian Dollar.
In the latest trade-related development, CNBC reported on Monday that Chinese officials were pessimistic about a trade deal with the United States, especially after the US President Donald Trump denied to roll back tariffs last week.
This coupled with a cautious sentiment around the global equity markets exerted some additional pressure on perceived riskier currencies – like the Aussie – and further collaborated to the pair’s slide to an intraday low level of 0.6885.
However, a subdued US dollar demand, despite a modest uptick in the US Treasury bond yields, turned out to be the only factor that helped limit deeper losses, rather assisted the pair to rebound around 15 pips from daily lows.
Moving ahead, Tuesday’s US economic docket, featuring the release of housing markets data, coupled with speeches by influential FOMC members will now be looked upon to grab some short-term trading opportunities.
Technical levels to watch
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