Home Forex News AUD/USD Recovery From 3-Week Lows Stalls On U.S-China Trade Deal Shock

AUD/USD Recovery From 3-Week Lows Stalls On U.S-China Trade Deal Shock

  • RBA Governor Optimism
  • U.S-China Trade Deal Concerns
  • Australia Private Sector Growth

The AUD/USD pair was the subject of wild swings, Tuesday morning, as traders reacted to Reserve Bank of Australia Governor, Philip Lowe comments and U.S-China trade deal concerns. The Australian Dollar soared against the greenback before tumbling amidst growing concerns of deteriorating trade relations between the U.S and China.

AUD Resurgence

On Monday, the pair has been on an impressive run, rallying by more than 0.5% as the Australian Dollar strengthened across the board. Tensions between the U.S and China, over trade, threaten to erase some of the AUD gains against the Dollar.

The Australian Dollar pushed higher amidst encouraging comments by Governor Low, indicating that the coronavirus’s impact might not be as bad as anticipated. Commonwealth Bank Flash Composite PMI pointing to the growth of the Australian private sector also continues to fuel the AUD against the Dollar.

Business activity returned to growth in June with the easing of lockdown restrictions, leading to a 52.6 PMI reading. The increase was fueled by growth in the service sector, which raised the most since COVID-19 started taking a toll on the economy.

U.S-China Trade Deal Shock

While the reopening of global economies continues to support risk sentiments leading to a weaker U.S dollar, concerns over the U.S–China trade deal threatens to change everything. The Australian Dollar shed a significant amount of value before recouping some of the losses following comments by White House advisor, Peter Navarro, signaling that a trade deal with China was over.

AUD/USD pair shed more than 60 pips to hit season lows of $0.6861. However, the pair did recoup the losses after President, Donald Trump, came out fighting insisting that the trade deal was still in force. Uncertainty, over the U.S-China trade deal, should continue to weigh on risk sentiments in the market likely to influence AUD/USD price action throughout the week.

Looking ahead focus will be on commentary about the U.S-Chin deal as well as the release of the Markit Manufacturing PMI for June in the U.S likely to influence dollar strength.


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