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AUD/USD seesaws near 0.7000, eyes China data for fresh impulse

  • AUD/USD awaits fresh clues while staying mildly positive after four consecutive weeks of run-up.
  • A sustained technical breakout joins the market’s optimism towards the US-China trade deal and risk-on sentiment to fuel the Aussie.
  • Australia’s New Year holiday, on Wednesday, highlights the risk of a pullback in case data from key customer disappoints.

AUD/USD bulls catch a breath around 0.7000 amid the initial Asian session on Tuesday. The pair rose considerably during the recent few days/weeks amid the market’s optimism surrounding the US-China trade relations and expectations of gains that drove attention off the greenback. The Aussie traders will now look forward to key activity numbers from the top customer while heading into the New Year holiday.

The holiday-shorten week failed to cheer the US dollar bulls at the start as risk-on sentiment surrounding the phase-one deal pleased the Aussie buyers. Also supporting the quote was the Trump administration’s not-so-good relations with the Middle East and North Korea that drove the market’s away from the greenback. It’s worth mentioning that mixed data out of the world’s largest economy couldn’t trigger much of the recovery.

The weekend news suggesting readiness on the part of the US and China to respect the phase-one terms seemed to have escalated the market’s risk-on during Monday. The mood got a boost from the recent South China Morning Post (SCMP) news that Beijing’s chief trade negotiator and Vice Premier Liu He will visit Washington next Saturday. Investors took it as the signing in ceremony of the phase-one deal.

However, year-end consolidation has stopped Wall Street from cheering the trade optimism while the US 10-year treasury yields mark gains to 1.88%.

Even if the Aussie markets will be close at 12:00 GMT, ahead of China’s scheduled release at 13:00 GMT, fears that a whale seating silently to pull over the recent rally make the case of December month PMI interesting.

After a strong reading in November, China’s headline PMIs are likely to step back. Herein, the NBS Manufacturing PMI could register 50.1 mark against 50.2 prior while Non-Manufacturing PMI might decline to 53.6 against 54.4 previous. If the numbers are to be believed, analysts at Danske Bank might have to alter their expectations of a brighter 2020 after the recently receding trade war fears.

Following the release of Chinese data, the US economics and trade headlines will be driving the global markets ahead of a major break on Wednesday.

Technical Analysis

The daily chart is likely running out of steam and indicates a pullback if prices slip beneath December 13 high around 0.6940, the weekly formation still has the room to challenge July top near 0.7080.

 

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