AUD/USD weighed on prospects of phase-one deal detail disappointment
|- AUD/USD capped in the upside correction ahead of phase-one deal signing.
- News that the US did not plan to cut China tariffs until after the Nov election is a weight.
AUD/USD is currently trading at 0.69 the figure in a slow start to the Asian day where the calendar is absent of date. AUD/USD was also quiet overnight in the US session, despite a drop in the Chinese yuan on negative news over the Chinese and US phase one trade deal.
News that the US did not plan to cut China tariffs until after the Nov election weighed on risk appetite in the US session ahead of the deal that is expected to be signed today in Washington.
"The signing ceremony for the “phase one” US-China trade deal is due to take place at the White House (reportedly 11:30am NY time but not confirmed). China Vice Premier Liu He will represent China," analysts at Westpac explained, adding:
"Representative of both countries should talk up the importance of the deal and stress their willingness to progress to “phase two” talks on more difficult issues. Markets will be looking for confirmation of newswire source reports on the scale of China’s pledged increases in purchases of US products. The default estimate is an extra $200bn of purchases over 2 years, compared to the 2017 baseline."
Chinese trade balance props up prices
Meanwhile, copper made fresh highs, trading above $6,310 for the first time since May last year, likely supporting the price of the Aussie which trades as a proxy to the metals. The commodities markets were elevated following yesterday's positive Chinse trade numbers for December.
Chinese exports rose by 7.6% in December by a significant increase from November’s decline of 1.3%. Economists polled by Reuters were expecting the exports to grow by 3.2%. Imports rose by 16.3% in December in the fastest growth rate since October 2018, higher than the previous increase of 0.6%. These numbers are crucial for the Aussie that trades as a proxy considering Australia ships two-thirds of its goods to China.
As for yields, "the Australian 3-year government bond yields drifted back to 0.78% and 10-year futures implied a 3bps slip back to 1.22% again. Market pricing for the RBA terminal cash rate stay near 0.48%," analysts at Westpac explained.
AUD/USD levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.