AUD/USD pulls back from three-month high ahead of Aussie Building Permits, China PMI

  • AUD/USD consolidates recent gains, from three-month high, to revisit the sub-0.6900 area.
  • Fed’s hawkish statement fails to supersede third consecutive rate cut, downbeat inflation concerns.
  • Traders await AU/China data amid recently renewed US-China trade optimism.

With the key data from the biggest customer on the cards, in addition to second-tier statistics from home, AUD/USD retraces some of its recent gains from three-month top to 0.6898 by the press time of early Asian morning on Thursday.

While welcome figures of Australian Consumer Price Index (CPI) data backed the Reserve Bank of Australia (RBA) Governor Philip Lowe’s upbeat remarks on early-Wednesday, the US Federal Reserve’s third consecutive rate cut and concerns for weak inflation helped the Aussie to challenge July-end high by the day-end.

On the other hand, optimism surrounding the trade deal between the United States (US) and China shrugs off the need for next month’s Asia-Pacific Economic Cooperation (APEC) meeting in Chile. Though, the Global Times (GT) headlines suggesting that the US manufacturers need a deal more and the US Treasury Secretary Steve Mnuchin’s comments that no Beijing trip on radar yet seems to weigh on market’s risk-tone.

Also exerting downward pressure on the risk sentiment is a Brexit statement from the global rating agency Moody’s. The rating giant said that Brexit extension removes an immediate risk of no-deal but prolongs uncertainty. The UK Parliament is still half-way through finalizing on a snap election in December with opposition staying ready to call for a referendum.

As a result, the US 10-year Treasury yields lost more than eight basis points to 1.78% by the end of US session on Wednesday whereas Wall Street also

Looking forward, investors will now be watching over the economic calendar, while also keeping an eye on trade/Brexit headlines. On the data front, Australia’s September month Building Permits and China’s official activity numbers for October will be in the spotlight. While China’s NBS Manufacturing Purchasing Managers Index (PMI) is expected to remain unchanged, with a likely upbeat reading of Non-Manufacturing PMI, Aussie Building Permits could impress buyers if marching 0.50% forecast versus -1.1% previous decline.

Technical Analysis

Despite crossing September top, the Aussie pair fails to hold on to gain and requires a clear break above July 10 low of 0.6910 to aim for a 200-day Simple Moving Average (EMA) level of 0.6957. In a case where prices stay below 0.6900 marks, last week’s top of 0.6885 and 100-day SMA level of 0.6850 will be on sellers’ radar.

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