AUD/USD awaits signing of US/Sino trade-deal, holding on the 0.69 handle
- AUD/USD sits between the 50 and 200-hour moving averages ina quiet start in Asia, awaiting Chinese data.
- Bullish sentiment surrounding the US and Chinse trade deal is underpinning risk-on support for AUD and commodities.
AUD/USD is currently trading at 0.6903 having stuck to a tight range overnight between the 200 and 50-hour moving averages, between 0.6919 and 0.6894.
It was a risk-on day on Wall Street but the Fx complex was a little mixed, with both the US dollar and antipodeans underpinned on the news that the US Treasury will remove China from its list of currency manipulators ahead of this week’s trade deal being signed as the Chinese delegation touched down on US soil which is underpinning both growth expectations and the CNY (AUD tends to track the yuan and has traded as proxy to the trade war/news).
As for the Commodity complex, for which the Aussie is closely correlated, the gains in industrial metals and agriculture outweighed the losses in energy and precious metals which made for a balanced outcome for AUD. Copper led metals markets higher, up 1.5% at $6,291, a fresh high back to May last year.
Meanwhile, with a focus on the Reserve Bank of Australia, (RBA), "the Australian 3-year government bond yields also edged up towards 80bps (from 78bps) while 10-year futures implied a 3bps back to 1.24% again and the pricing of a cut from RBA in Feb pulled back toward 42%," analysts at Westpac explained.
Key data on the horizon
China December trade data will be out today, again, that has no fixed time as per usual, (but likely around 2pm Syd/11am local). "Consensus is for the trade surplus to bounce to about $46bn, with exports improving to +3%yr and imports +10%yr," analysts at Westpac called.
Then, in the US session, December's Consumer Price Index will be out with consensus 0.3%MpM, 2.4%YoY overall and 0.2%MoM, 2.3%YoY ex-food & energy. Recall that the Fed judges this series to consistently overstate inflation so targets the PCE deflator, which was a muted 1.5%YoY in Nov, 1.6% on the core rate. Even so, it can still impact on markets," analysts at Westpac explained.
Valeria Bednarik, the Chief Analyst at FXStreet, explained that the AUD/USD pair is just below the 61.8% retracement of its latest bullish tun, unable to clear the Fibonacci resistance.
In the short-term, and according to the 4-hour chart, the pair is neutral-to-bullish, as it’s confined between directionless moving averages while technical indicators eased from intraday highs, holding within positive levels but gaining downward traction. The pair would further lose its upward potential on a break below 0.6885, the immediate support.