AUD/USD struggles around multi-month low amid lack of fresh catalysts

• Risk recovery remains tepid with the USD retracing earlier declines.
• Lack of major data keeps highlighting trade/political headlines as the key drivers.

With little or no fresh clues off-late, except receding trade tensions and comments concerning the Fed, the AUD/USD pair remains modestly unchanged near 0.6760 during early Wednesday morning in Asia.

China’s backtracking of the USD/CNY rate followed risk recovery among major markets while no rate change from the Reserve Bank of Australia (RBA), coupled with the absence of emphasis on future rate cuts, also halted the Aussie’s further declines on Tuesday.

However, upbeat comments from Federal Reserve Bank of St. Louis President James Bullard, like we have already adjusted for trade uncertainty, helped the US Dollar (USD) to recover some losses in recent hours.

It should also be noted that the White House Advisor Larry Kudlow mentioned possibilities of a change in the recently announced tariffs by the US if all goes well during the early September trade talks with China.

Wall Street recovered previous losses while the US ten-year treasury yield also remained 2 basis points (bps) up to 1.716%, resulting in a fall back of the ten-year to three-month yield curve inversion that slumped to the lowest since the great financial crisis on Monday.

While June month Home Loans, expected 0.6% versus 0.0% prior, can act as a second-tier catalyst, investors will keep an eye over the trade headlines for a much better view of near-term market direction.

Technical Analysis

Sellers await a break below the recent low of 0.6748 to bet on 0.6700 round-figure and January month’s bottom surrounding 0.6685. However, oversold conditions of 14-day relative strength index (RSI) can trigger the pair’s bounce to June month low of 0.6830 if managed to successfully conquer 0.6800 immediate resistance.