AUD/USD struggles near 0.7050 to recover recent losses amid trade positive reports
- Pessimism surrounding the Chinese economy still haunts the Aussie buyers.
- Positive developments at the US-China trade discussions may play positively.
- All eyes of trade negotiations and the FOMC.
AUD/USD is trading near 0.7050 at the initial Asian trading session on Wednesday. The Aussie pair had to bear the burden of China’s sluggish PMI data on Tuesday as it refrained from taking advantage of the broad US Dollar (USD) weakness. With Labour day holidays in Europe, China and Switzerland likely restricting the data flow, traders may cheer the latest developments on the ongoing US-China trade talks in Beijing.
Despite witnessing upbeat CB consumer confidence and pending home sales numbers from the US, the greenback traders gave more importance to sluggish print of the Chicago purchasing managers’ index (PMI) ahead of today’s FOMC meeting.
With this, the greenback stretched its recent downturn against the majority of its counterparts. However, the Australian Dollar (AUD) couldn’t be positive as China’s headline PMI failed to match market consensus and prior, giving a hint that the present stimulus isn’t enough to boost the world’s second-largest economy and Australia’s largest customer.
The US trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are in Beijing for having final trade negotiations with the Chinese team led by Vice Premier Liu He. The latest report by the Financial Times says that the US agrees to drop its tough intellectual property rights (IPR) demands in order to have easy bargaining.
IPR theft has been one of the toughest points when it comes to the US-China relation as the Trump administration has so far alleged China over the IPR thefts.
While trade positive news reports can please Aussie traders, April month AiG performance manufacturing index, which is likely to remain unchanged at 51, could offer little moves from the data front.
Elsewhere, the US Dollar (USD) traders will keep a close eye on today’s Federal Open Market Committee (FOMC) monetary policy meeting. Considering latest turn on the Fed’s rate bias, quarterly forecasts and press conference from the Chairman Jerome Powell will be closely observed to ascertain future policy direction of the US central bank.
Technical Analysis
On the break of 0.7030 immediate support, the Aussie pair can revisit an upward sloping trend-line from January 04, at 0.7000 now, whereas 0.6980 and 0.6910 can please the bears then after.
Alternatively, 0.7070 and 50-day simple moving average (SMA) level of 0.7105 could entertain short-term buyers ahead of challenging them with 100-day SMA around 0.7130.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
