AUD/USD: Return of Sino-American tussle pauses upside beyond 0.6900

AUD/USD extends the early-day pullback from the highest since January 2020 while declining to 0.6935, down 0.08% on a day, during Friday’s Asian session. While the return of the US-China tension and the pre-NFP cautious sentiment seems to have weighed on the pair off-late, the latest comments from the Aussie PM Scott Morrison exert immediate downside pressure onto the quote.

Aussie PM Morrison said that coronavirus (COVID-19) has had a massive hit on the revenue side of the budget. The national leader also said that foreign investment in Australia must be on our terms and on our rules.

Earlier during the US day, US President Donald Trump rekindled tension with Beijing after issuing the memo for recommendations to protect US investors from China’s failure to allow audits of US-listed Chinese companies, per Reuters. Also portraying the strain between the world’s two largest economies could be the White House statement saying that China should fulfill its commitments on Hong Kong and end the persecution of ethnic and religious minorities.

Even so, US Trade Representative Robert Lighthizer felt “very good” about phase one trade deal with the Asian major.

While following the aforementioned catalysts, the market’s risk-tone sentiment part ways from the previous day’s optimism. As a result, the US 10-year Treasury yields dropped 1.8 basis points (bps) to 0.802% whereas stocks in Japan and Australia also print mild losses by the press time.

Given the presence of the US May month employment report, markets are less likely to watch for anything else. However, the US-China headlines might entertain traders during the pre-NFP trading lull.

Technical analysis

Sellers are waiting for a downside break below the early-January low near 0.6850 to trigger fresh pullback moves toward the February month top near 0.6775. On the contrary, 0.7000 round-figure and January month top near 0.7050 can check the pair’s immediate upside.