AUD/USD: 50-hour MA hurdle caps upside even as trade talks gain momentum
- AUD/USD failed to take out key average hurdle despite renewed trade optimism.
- The US and China negotiators held a phone call on trade talks on Monday.
- RBA's Debelle said slower wage growth is a new norm in Australia.
The Aussie dollar, a G-7 proxy for China, is not impressed by reports of US-China trade talks gaining momentum.
Xinhua, China's official news agency, reported nearly two hours ago that the US and China have agreed to continue phase one negotiations. China's Commerce Ministry was also out on the wires stating that China's negotiating team had a phone call with its US counterpart and both parties discussed trade issues and agreed to reach consensus.
The AUD/USD pair picked up a bid near 0.6770 in response to renewed trade optimism, but failed to penetrate the 50-hour moving average hurdle at 0.6786 and quickly fell back to 0.6770.
Currently, the pair is trading at 0.6780. As per the latest reports, US Trade Representative Robert Lighthizer has confirmed that a call with the Chinese negotiators took place on Monday. So far, however, that has failed to put a strong bid under the AUD.
The AUD's lackluster response is not surprising, as both sides have a history of backtracking on positive comments on the trade front.
Also, Reserve Bank of Australia's Deputy Governor Guy Debelle's comments on wage growth could be capping upside in the Aussie Dollar. Debelle said in early Asia that slower wage growth is a new norm in Australia and further tightening of the labor market is required to push up wage-price inflation.
Looking forward, the AUD may continue to trade flat-to-negative, unless the equities surge, strengthening the demand for risk currencies.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
