AUD/USD fails to hold above 0.6900 as DXY extends rally
- US Dollar Index advances to fresh multi-week highs above 98.
- US-China trade optimism helps the pair limit its losses.
- Coming up: Reserve Bank of Australia's Monetary Policy Statement.
After advancing to a daily high of 0.6913 during the European trading hours, the AUD/USD pair turned south in the second half of the day and erased a large portion of its daily gains. As of writing, the pair was up 0.07% on the day at 0.6887.
Earlier in the day, reports suggesting that the United States and China have agreed to roll back tariffs at an equally gradual pace as part of the phase-one of the trade deal allowed antipodeans to gather strength against their major rivals.
However, the upbeat market sentiment also caused a sharp upsurge in the 10-year US Treasury bond yield and helped the Greenback continue to outperform its peers. The US Dollar Index, which tracks the USD's valuation against a basket of six major currencies, rose to its highest level since October 16th at 98.21 on Wednesday to make it difficult for the pair to stretch higher.
Eyes on RBA
In the early trading hours of the Asian session on Friday, the Reserve Bank (RBA) of Australia will release its Monetary Policy Statement. Commenting on the RBA's stance, "The RBA is not complacent about AUD remaining weak. In retaining the pledge that it is “is prepared to ease monetary policy further if needed,” the RBA Board surely had the currency uppermost in mind," said Westpac analysts after the bank kept its policy rate unchanged earlier this week as expected.
Markets will also be paying close attention to the Trade Balance data from China for signs of recovery in the world's second-largest economy.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
