AUD/USD inches higher toward 0.68 as attention shifts to FOMC minutes
|- RBA's Lowe calls escalating US-China trade war 'very worrying.'
- US Dollar Index stays directionless above 98 mark.
- FOMC is not expected to make any surprise changes to its language.
After closing the previous day with a modest 20-pip gain, the AUD/USD pair edged higher on Wednesday but still continues to in its tight two-week-old trading range, preserving its near-term neutral outlook. As of writing, the pair was up 0.25% on the day at 0.6793.
Commenting on the US-China trade dispute earlier today, Reserve Bank of Australia (RBA) Governor Philip Lowe said the escalating trade war was 'very worrying' and that it was hurting the global investment, wages and economic growth.
On a positive note, China's Foreign Ministry in a statement noted that it was natural for the US and China to have differences on trade and reiterated their desire to resolve those issues through dialogue. Furthermore, US President Trump today said that the US will probably make a trade deal with China to allow trade-sensitive antipodeans to cling to their daily gains.
Eyes turn to FOMC minutes
On the other hand, the lack of high-tier macroeconomic data releases from the US forces the US Dollar Index to move sideways near its opening level of 98.15 as investors refrain from making any bets before the FOMC releases the minutes of its July 30-31 meeting later in the session.
Previewing the FOMC statement, TD Securities analysts said that they would not be surprised if the meeting minutes revealed a debate among some participants who do not believe that the Fed should be cutting its policy rate at all.
"Powell and co are between a rock and a hard place as far as facing external pressures to ease; both from Trump and the bond market. To this end, we are more circumspect that the bond market will show much sympathy to a division in the Minutes, particularly with so much focus on Powell's appearance at Jackson Hole later this week,” analysts concluded.
Technical levels to watch for
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