AUD/USD struggles to justify trade-positive headlines amid broad USD strength

• AUD/USD pops and drops after trade-positive news from China.
• The USD stays strong amid political plays concerning the US.
• Fed speak, US housing numbers and trade/political headlines in the spotlight.

Despite news of Chinese goodwill gestures to safeguard the US-China deal, AUD/USD remains below 0.6800 by the press time of early Wednesday.

The Aussie pair initially popped to day’s high of 0.6805 on the South China Morning Post (SCMP) news that China is looking to buy more agricultural products from the US after President Donald Trump signaled readiness to reject bad deal at the United Nations General Assembly (UNGA). Also supporting the optimism was a headline that profits of China’s state-owned companies rose 6.1% YoY.

However, the quote refrains from further upside as the US Dollar (USD) remains as bulls’ favorite amid political challenges to the US. Among them, inquiry to impeach the US President Trump and the US-Iran tension seems to acquire the front-line. Further, China’s Foreign Minister Wang Yi fired some worrisome statements indirectly the US to not interfere in the affairs relating to Hong Kong also push investor towards the greenback.

Overall, the market sentiment is likely to have improved as the US 10-year Treasury yield flashes gains around 1.65% following a drop to the monthly low. Also portraying the optimism is a positive reading by the S&P500 index.

While trade/political headline will keep the spotlight, scheduled speeches from the Presidents of Federal Reserve Bank of Chicago and Federal Reserve Bank of Kansas City, Charles Evans and Esther George respectively, will also entertain momentum traders. Additionally, the US New Home Sales for August could as well be considered as a second-tier catalyst.

Technical Analysis

Unless breaking 0.6820/25 region including 10-day simple moving average (SMA) and multiple highs marked during early August, prices can’t deny visiting 0.6760, 0.6740 and 0.6700 nearby supports. If the quote passes 0.6825, 0.6900 can appear on the chart.