- AUD/USD extends gains as officials from the US and China hold trade talks over the phone.
- Sustained risk-on looks likely and help the AUD post a convincing move above the key hurdle.
The already bid AUD is extending gains against its US counterpart on news that the US and Chinese officials held trade talks over a phone call.
Trade tensions ease
AUD/USD pair crossed above the 100-day average at 0.6535 and printed a session high of 0.6546 after news of US-China trade talks hit the wires. Both sides agreed to implement phase-1 of the trade deal signed in December and keep communication lines open, according to Xinhua News.
Tensions between the two nations escalated earlier this week with the US authorities accusing China of spreading the coronavirus and President Trump threatening to levy punitive tariffs on imports from China.
Risk-on
Reports stating that the US and Chinese diplomats are planning to re-establish trade-talks beginning next week hit the wires in early Asia, restoring the risk sentiment and putting a bid under the AUD/USD when it was trading around 0.6490.
The risk sentiment further strengthened with news that Saudi Arabia would be raising oil prices to stabilize the oil market.
The Reserve Bank of Australia's Quarterly Statement of Monetary Policy did bring in bad news in the form of a dismal 2020 GDP forecasts. Markets, however, were prepared for the same as Governor Lowe recently talked about a rise in the jobless rate to 10% by June and a 10% drop in the output in the second quarter. As a result, the AUD/USD pair managed to keep gains.
Looking forward, the pair looks set for a convincing break above the 100-day average, as trade talks are likely to keep risk assets better bid while heading into the weekend. The US Nonfarm payrolls are expected to show the biggest monthly decline in jobs on record. That, however, may end up bolstering expectations for negative rates in the US, sending the greenback lower across the board.
At press time, the AUD/USD pair is trading near 0.6545, representing a 0.77% gain on the day.
Technical 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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.