- AUD/USD keeps inside the two-week-old trading range.
- Risk sentiment again turned sour with fresh doubts on US-China trade deal.
- Fed policymakers, the US Secretary of State try to calm the bears.
With the mixed comments from the US policymakers confusing Aussie traders amid a lack of data at home, AUD/USD remains little changed while trading near 0.6780 during early Wednesday morning in Asia.
While the US President Donald Trump said that he isn’t ready to do a trade deal with China even after adding “maybe”, the Secretary of State Mike Pompeo sounded a bit upbeat concerning the US-China trade talks and said he expects to overcome trade war by 2020 election. Adding the uncertainty was an upbeat statement from the Federal Reserve Bank of San Francisco’s President Mary C. Daly who praised the US employment statistics while turning the expectations of a recession down.
The market again turned risk-off during the previous day amid a light economic calendar and political uncertainty at Italy. As a result, the US treasury yields lost a major chunk of their earlier recoveries.
It should also be noted that minutes statement of the Reserve Bank of Australia’s (RBA) latest monetary policy meeting reiterated the readiness to alter monetary policy, if needed which the market showed little reaction to.
Moving on, Australia’s Westpac Leading Index and the US Existing Home Sales can entertain traders ahead of the key Federal Open Market Committee (FOMC) minutes. The private sentiment gauge from Australia slipped -0.08% MoM previously while the US housing market indicator bears an upbeat forecast of 5.39M versus 5.27M prior.
The FOMC minutes is the key as giving details of the first in a decade rate cut by the US central bank. As per the TD Securities, “We expect the July FOMC meeting minutes to attempt to clarify the path forward after Chair Powell remained non-committal on guidance for future rate movements at his July press conference. Powell painted the Fed's action as a "mid-cycle adjustment" and not necessarily one cut or the "beginning of a long series of cuts." The minutes should support our view that soft global growth, trade uncertainty, and persistent below-target inflation should keep the Fed on a dovish footing.”
Technical Analysis
A two-week-old descending trend-line limits the pair’s immediate upside at 0.6800 whereas 0.6750/45 offers strong downside support. Hence, any major momentum is ruled out unless the quote successfully breaks the range. In doing so, June month low near 0.6830 and monthly bottom surrounding 0.6677 should be given high importance.
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