- Investors looked past Friday’s breakthrough on the US-China trade disputes.
- Weaker Chinese data/ pickup in the USD demand exerted some fresh pressure.
The AUD/USD pair refreshed daily lows, around the 0.6760 region during the early European session on Monday and erased a major part of the previous session's goodish move up to three-week tops.
Despite a positive outcome from the much-hyped US-China trade negotiations, the pair failed to capitalize on last week's bullish move and met with some fresh supply on the first day of a new trading week amid a modest pickup in the US Dollar demand.
Fading trade optimism/weaker Chinese trade data weigh
It is worth reporting that on Friday the US and China announced a roadmap to a phase 1 agreement, which included the suspension of new US tariff planned for this week and a commitment from China to buy more US agricultural products.
However, some renewed USD buying interest, supported by some follow-through uptick in the US Treasury bond yields, turned out to be the only factor that kept a lid on any further move up, rather prompted some fresh selling around the major.
This coupled with weaker-than-expected trade data from China, showing the sharpest drop in imports since 2016, further undermined demand for the China-proxy Australian Dollar and collaborated to the pair's intraday slide on Monday.
Meanwhile, a slight deterioration in the global risk sentiment, as depicted by sliding equities, also did little to lend any support to perceived riskier currencies – like the Aussie – amid relatively thin liquidity conditions on the back of a holiday in the US.
It will now be interesting to see if the pair is able to attract any buying interest or the current pullback marks the end of the recent bounce from multi-year lows and the resumption of the prior/well-established bearish trend amid fading trade optimism.
Technical levels to watch
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 fluctuates in daily range above 1.0600
EUR/USD struggles to gather directional momentum and continues to fluctuate above 1.0600 on Tuesday. The modest improvement seen in risk mood limits the US Dollar's gains as investors await Fed Chairman Jerome Powell's speech.
GBP/USD stabilizes near 1.2450 ahead of Powell speech
GBP/USD holds steady at around 1.2450 after recovering from the multi-month low it touched near 1.2400 in the European morning. The USD struggles to gather strength after disappointing housing data. Market focus shifts to Fed Chairman Powell's appearance.
Gold retreats to $2,370 as US yields push higher
Gold stages a correction on Tuesday and fluctuates in negative territory near $2,370 following Monday's upsurge. The benchmark 10-year US Treasury bond yield continues to push higher above 4.6% and makes it difficult for XAU/USD to gain traction.
XRP struggles below $0.50 resistance as SEC vs. Ripple lawsuit likely to enter final pretrial conference
XRP is struggling with resistance at $0.50 as Ripple and the US Securities and Exchange Commission (SEC) are gearing up for the final pretrial conference on Tuesday at a New York court.
US outperformance continues
The economic divergence between the US and the rest of the world has become increasingly pronounced. The latest US inflation prints highlight that underlying inflation pressures seemingly remain stickier than in most other parts of the world.