AUD/USD: Stays above 50-day SMA as US spreads trade optimism

  • Trade-positive headlines from the US favored AUD/USD.
  • Volatile markets, due to the ECB and the US CPI, marked a directionless day earlier.
  • The absence of Australian data shifts attention to US statistics and trade news for fresh impulse.

Following a day of goodwill gestures from the US and China, upbeat comments from the US seems to favor the AUD/USD pair as it takes the bids to 0.6870 during early Friday morning in Asia.

China released a list of the US goods to be exempted from fresh tariffs and also showed readiness to buy more agricultural products from the US. In return, the US delayed tariff hikes by a 15-day’s time to October 15.

While trade headlines were quite upbeat and favored commodity-linked currencies on early Thursday, the European Central Bank’s (ECB) deposit rate cut and the stimulus package, followed by the upbeat inflation data from the US, offered a quite volatile market session afterward.

As a result, the US treasury yields remained well around the monthly highs and Wall Street also fared better while Aussie pair stepped back from six-week highs but remains firm above 50-day simple moving average (SMA).

Given the absence of any data/event from Australia, traders will keep searching for clues from the US-China story while challenges to the risk sentiment will also be given due importance. However, the US Retail Sales numbers for August, expected 0.2% versus 0.7% MoM, and the Michigan Consumer Sentiment Index for September, consensus 90.9 against 89.8 prior, will direct moves then after.

Technical Analysis

Unless flashing a daily closing below 50-day SMA level of 0.6853, prices are less likely to aim for early-August highs surrounding 0.6820, which in turn increases the odds of the pair’s another run-up to challenge 100-day SMA level of 0.6905.

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