AUD/USD benefits from second-tier data, eyes on Aussie trade numbers, “Phase One” news
- Better than previous AiG Performance of Construction Index helps Aussie.
- US-China trade stories keep traders guessing, markets could see “Phase One” deal in December.
- Australia Trade Balance and headlines concerning the initial trade agreement will be in the spotlight.
Following an upbeat print of second-tier Aussie data, AUD/USD stops the previous declines and bounces back towards 0.6885 by the press time of early Asian morning on Thursday.
Recently, Australia’s AiG Performance of Construction Index registered more than 42.6 prior to 43.9 during October.
The Aussie pair earlier dropped on concerns that the United States (US) and China are still far from the initial “Phase One” trade deal. Reuters said the same could be signed in December while Fox Business News quoted Chinese trade source as saying the US will not increase tariffs on Chinese goods scheduled to take place from December 15.
Market sentiment was also downbeat amid a lack of clear signal from global central bankers after a recent run of upbeat data and trade optimism receded fears of another slowdown. As a result, the US 10-year Treasury yields shed nearly four basis points off its latest gains to 1.83% while Wall Street also registered mixed responses at the end of Wednesday’s session.
Traders will now seek more clues to determine the Reserve Bank of Australia’s (RBA) next move, after the latest no change. In doing so, Australia’s September month trade numbers will become the immediate catalyst. Following that, weekly reading of the US Initial Jobless Claims and speech from the President and CEO of the Federal Reserve Bank of Dallas, Robert Kaplan, will be observed closely. It should, however, be noted that headlines concerning the US-China trade deal will keep the driver’s seat all the time.
Westpac follows the suit of a bit softer trade numbers while saying, “Australia should record another historically large trade surplus in September (11:30 am Syd/8:30am Sing/HK). The consensus is A$5.1bn after $5.9bn in August but Westpac is less optimistic, on A$4.7bn. For context, the 2017 monthly average trade balance was $0.8bn, in 2018 it was $1.9bn and so far in 2019, $5.8bn. We expect exports to have slipped -2.9%mth, with both prices and volumes of iron ore and coal likely to be down versus August. Imports should be about flat in the month and also the year. Import volumes are being constrained by weak domestic demand and pass-through of AUD depreciation.”
Technical Analysis
Unless rising back beyond 0.6900, comprising support-turned-resistance trend line stretched since October 16, prices are less likely to aim for 0.6930 and 200-day Simple Moving Average (SMA) level of 0.6950. As a result, sellers will keep eyes on 0.6800 mark during pairs’ fresh declines.