AUD/USD: On the front foot after trade positive news, greenback weakness

AUD/USD remains on the road to recovery after the latest comments from the US President Donald Trump and Fed policymakers.
The US President signal brighter chances of a trade deal with China, criticizes Fed.
Fed policymakers keep bearish view intact.

Anil Panchal FXStreet

AUD/USD takes the bids to 0.6780 in a reaction to the latest statements from the US President Donald Trump and the Fed policymakers published during early Asian morning on Friday.

The US President keeps signaling brighter chances of a trade deal with China while expecting no retaliation from the dragon nation in response to tariff increase. Mr. Trump also repeated the habit of attacking the US Federal Reserve Chairman Jerome Powell’s monetary policy decisions. He further mentioned that China could deal with Hong Kong quickly but would not want to see a violent crackdown.

On the other hand, Fed policymakers like Presidents of the Federal Reserve Bank of Minneapolis and the Federal Reserve Bank of St. Louis, namely Neel Kashkari, and James Bullard respectively, kept their bearish view intact while supporting wait and watch mode of the central bank for further action.

While trade positive news helps support market sentiment after yield inversion did a bears’ show in recent days, attack of the Fed and dovish view of the policymakers keep the US Dollar (USD) on the back foot. As a result, the AUD/USD pair managed to carry its earlier recovery forward.

However, gains remain capped after the news from the WA Today, quoting Paul Bloxham, while saying that banks are betting on steeper rate cuts from the Reserve Bank of Australia (RBA).

It is a quiet day on the economic calendar for Asia with the US housing and Michigan Consumer Sentiment Index likely entertaining traders afterward. With this, trade/political news can keep markets busy.

Technical Analysis

The pair stays in the range between 0.6750/45 and 0.6822 with recent lower highs on a daily chart favoring the bears.

1. R3 0.6867
2. R2 0.6838
3. R1 0.6793
PP 0.6764
1. S1 0.6719
2. S2 0.669
3. S3 0.6645

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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