AUD/USD: upside potential on a technical basis and news of China/US seeking to make amends

• The greenback is flexing its muscles as the NY session moves along, having made a fresh high within today's range of between 96.3160-96.7650 so far in the DXY. 
• AUD/USD has been capped today at the 0.7286 mark although the technical picture on the daily sticks points to a continuation of the upside. 

AUD/USD was stabilising in Asia overnight, benefitting from the sounds of peace drums with respect to China's and the US trade spat. The two leading nations, after two months of stalemate and no talks, are to meet later on this month and that headline was a booster of the Aussie bulls, also benefitting from the Aussie jobs data when unemployment fell even in light of a higher participation number, despite the headline data missing expectations. 

Just today, the Wall Street Journal reported on the China/US meeting, however, the talks have been characterized as "low level" talks whereby Chinese vice minister will be sent to meet  David Malpass, the Treasury Undersecretary and Vice Commerce Minister, Wang Shouwen on the 22nd and 3rd Aug - but its a plus for Aussie bulls nonetheless.

A busy end to the month, and very key for AUD/USD

Meanwhile, it is going to be a busy end of the month in that case because we also have the Fed Minutes from the most recent FOMC meeting held on July 31-Aug. 1, which will be published just before the Jackson Hole that takes place on August 23 as well running to the 25th. The strength of the greenback is likely to be a hot topic for discussion over the course of the event - "Changing Market Structure and Implications for Monetary Policy" is the topic for the Jackson Hole symposium.

Overall, for the Aussie, the commodity complex remains fragile due to a strong dollar that rallied to a 14 month high just shy of the 97 handle yesterday in fact. The CRB index also broke the neckline of the H&S pattern earlier this week and copper has shed over 20 per cent since early June. There has been a deep decline in the Chinese currencies, both on and offshore. The Aussie has traded as a proxy to Chinese assets tied to the nation's dire looking growth prospects due to the trade war fears that have to some large selloffs. However, should the sentiment pick up that the US and China are on the brink of making amends, this could underpin the upside on global equities and make a case for a comeback in the EMs and the Aussie - (we will wait to see how Asia responds tonight after what looks to be a very strong close on Wall Street today - the Aussie could be set for a bottom here on the charts).

AUD/USD levels

The longer daily wick on the previous candle is bullish and the price has been supported at the support of the top of the descending bear channel. There was a dip below but it was met with a lack of momentum and choppy price action - a sign of a correction. 0.72 the figure held and the upside target is for a break through 0.7298 as being the 38.2 pct of 0.7453 (Aug 9 high) to 0.7203 (Wednesday's 19-mth low). A break of 0.7320 opens the 10-D SMA up at 0.7331 and then the 21-D SMA just below 0.7380. However, CNH is one to watch also and should the correction turn back towards the psychological 7.00 mark, the Aussie is likely to resume its downtrend and below 0.7150 en route for a test below 0.7000.