AUD/USD flirting with lows, just below 0.7300 handle
| • Resurfacing US-China trade tensions prompt some long-unwinding trade.
• Weaker commodity prices exert additional downward pressure on the Aussie.
• Investors now look forward to RBA minutes/Lowe’s speech for fresh impetus.
The AUD/USD pair extended its intraday retracement slide from the 0.7325 region and was now seen sliding further below the 0.7300 handle.
The pair struggled to build on last week's strong up-move and snapped four consecutive days of winning streak, eroding a major part of Friday's goodish gains to 2-1/2 month tops.
Conflicting signals on the prospects for a breakthrough in the US-China trade dispute turned out to be one of the key factors exerting some fresh downward pressure on the China-proxy Australian Dollar and prompting some long-unwinding at the start of a new trading week.
Friday's optimistic trade-related comments by the US President Donald Trump, saying that the US may not have to impose more tariffs on Chinese goods, quickly faded after leaders failed to agree on a communique at an APEC meeting in Papua New Guinea over the weekend.
This coupled with a weaker tone around commodity space, especially copper, undermined the commodity-linked currency - Aussie and further collaborated to the pair's ongoing slide, though a subdued US Dollar price action helped limit deeper losses at least for the time being.
The USD bulls held on the defensive through the mid-European session on Monday as investors continue to assess the Fed Vice Chairman Richard Clarida's dovish comments on Friday, saying that interest rates are nearing a neutral rate. Hence, it would be prudent to wait for a strong follow-through selling before confirming that the pair might have already topped out in the near-term.
In absence of any major market moving economic releases on Monday, market participants now look forward to Tuesday's release of the latest RBA monetary policy meeting minutes and a scheduled speech by Governor Philip Lowe for some meaningful impetus.
Technical levels to watch
Immediate support is pegged around the 0.7275 region and is closely followed by 100-day SMA, near mid-0.7200s, below which the pair is likely to accelerate the fall towards challenging the 0.7200 handle en-route the 0.7175-65 zone. On the flip side, the 0.7325-30 region now seems to have emerged as an immediate resistance, which if cleared should assist the pair to build on its recent upward trajectory towards reclaiming the 0.7400 handle.
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