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AUD/USD stays in tight consolidation channel above 0.6850

  • China publishes list of US imports exempt from tariffs. 
  • Consumer confidence in Australia is expected to deteriorate in September. 
  • US Dollar Index climbs to weekly highs above 98.50.

The AUD/USD pair came under modest bearish pressure during the Asian trading hours following the disappointing data from Australia and dropped below 0.6850. However, renewed optimism surrounding the US-China trade conflict allowed the AUD to recover its losses. Nevertheless, the broad USD strength in the second half of the day didn't allow the pair, which was last virtually unchanged on the day at 0.6860, to post any meaningful gains.

Consumer sentiment weakens in Australia

The data published by the Faculty of Economics and Commerce Melbourne Institute on Wednesday revealed that the Consumer Confidence Index dropped to -1.7% in September from +3.6% in August. Assessing the data, “The consumer mood has lapsed back into slight negative territory again with continued pressure on family finances and concerns about the near term outlook weighing on sentiment,” said Westpac analyst Bill Evans.

Later in the day, China's Finance Ministry published a list of US imports that will be exempt from retaliatory tariffs and raised expectations of next months high-level trade talks in the US leading to a deal and helped antipodeans stay resilient against its rivals.

On the other hand, the selling pressure surrounding major European currencies today helped the Greenback continue to find demand and lifted the US Dollar Index to a fresh weekly high of 98.75. At the moment, the DXY is up 0.3% on the day at 98.63.

On Thursday, Consumer Inflation Expectations and Investment Lending for Homes figures from Australia will be looked upon for fresh impetus. The US Economic docket will feature the Consumer Price Index (CPI) data.

Technical levels to watch for

 

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