AUD/USD slumps to fresh multi week lows below 0.69
- Fading optimism surrounding US-China trade talks weighs on antipodeans.
- US Dollar Index clings to gains above 98 handle.
- Coming up on Wednesday: Second-quarter inflation data from Australia.
The AUD/USD pair extended its daily slide in the second half of the day and broke below 0.69 to touch its lowest level since mid-June at 0.6870. As of writing, the pair was trading a couple of pips above that level, losing 0.4% on the day. With today's slump, the pair remains on track to close the tenth straight trading day in the negative territory.
Risk-aversion dominates on Tuesday
The dismal market mood following the latest headlines on the US-China trade conflict seems to be weighing on the antipodeans today. Earlier today, US President Donald Trump warned China not to wait for the 2020 election in the US saying that he would offer a "much tougher deal or a no deal at all" on trade if he were to get reelected.
Additionally, during a television interview, Trump noted that he wasn't sure if he will accept China's offers. Now investors are waiting for sides to deliver remarks following today's high-level talks in Shanghai.
Eyes on FOMC following US inflation data
Meanwhile, today's data from the US revealed that the Fed's favourite gauge of inflation, the core Personal Consumption Expenditures (PCE) Price Index, edged higher to 1.6% annually in June but fell short of the market expectation of 1.5%. Other data showed that Pending Home Sales increased by 2.8% in the same period. Finally, the Conference Board's Consumer Confidence Index jumped to 135.7 in July from 121.5.
Nevertheless, the market reaction to the data was relatively muted as with investors refraining from making large bets ahead of tomorrow's critical FOMC announcements.
Before that critical event, the Reserve Bank of Australia will release inflation data. A softer-than-expected increase in the Consumer Price Index could put the Aussie under a renewed selling pressure as it would open the door for more rate cuts.
Technical levels to watch for