Reports President Trump signs off on US-China trade deal to avert December tariffs - Bloomberg

Reports President Trump signed off on the US-China trade deal to avert December tariffs, according to Bloomberg, citing people familiar with the matter.

• The deal includes a promise by the Chinese to buy more U.S. farm products, the people said.
• The officials also discussed potential reductions in existing tariffs on Chinese goods.
• While the parties have agreed to the terms, the legal text hasn't yet been finalized, they said.

FX implications

While the knee-jerk on the headlines is positive for AUD crosses and CNH, it may be a buy the dip scenario on a grind higher so long as good news keeps flowing. 

AUD/JPY has notoriously been the go-to trade on trade headlines. 

AUD/JPY daily chart

The daily chart shows that the price has breached the 2019 downtrend resistance line as well as the 200-day moving average where a confluence of a 50% mean reversion of the mid-April highs to late August swing lows meets. The price action is highly bullish with the prior day's candlestick engulfing followed by a convincing break higher through key resistance today. It is usually prudent not to chase such a large candle immediately and wait for a high conviction price-action set up. Bulls will be looking for any pullbacks to hold above the 2019 downtrend (78.80) and maximise on a constructive continuation trade back above the 200-DMA towards a 61.8% retracement in the immediate future. A grind higher will target the 80 handle.

AUD/USD daily chart

However, traders will want to pay attention to AUD/USD price action as well considering the late Oct and early November double top highs and July lows between 0.6910 around 0.6930 with the confluence of the 200-DMA. If historic price action is to be respected, (where similar rallies have met resistance and pulled back before continuing), we would expect to see consolidation in AUD/USD and a potential pullback before the next grind higher beyond the aforementioned resistance. Hence, why prudent AUD/JPY bulls may choose to look for a constructive and high conviction continuation trade instead of stacking all chips down in chasing the bid at this juncture.