AUD/USD seesaws near three-week high as traders wait for China trade balance

• AUD/USD nears multi-day high amid trade positive headlines.
• The dovish sentiment at the RBA challenges buyers.
• China’s trade balance, fresh clues surrounding the US-China trade deal, will be in the spotlight.

With the trade positive sentiment confronting the RBA’s dovish outlook, AUD/USD search for fresh catalysts to extend its recent rally while taking rounds to 0.6796 amid initial Asian trading session on Monday.

The US and China struck an initial trade agreement during the later part of the last week which requires China to import more agricultural products from the United States (US) while also taking steps to ensure the safety of the US intellectual property rights. The US President, in return, will stay away from further tariff increase, which was scheduled to take effect from October 15.

Recent ambiguities surrounding the US tariff increase is now out with the US President’s tweet confirming no such rise in the levies that were to step-up from 25% to 30% from Tuesday.

However, dovish sentiment surrounding the Reserve Bank of Australia’s (RBA) next action seems weighing on the Aussie. Major market consensus favor one more rate cut of 0.25% by the Australian central bank during the year 2019 while considering downbeat fundamentals and recent signals from the policymakers.

With this, the US 10-year Treasury yields stay mostly near late-September tops with the equity future also indicating positive signals.

Investors now await China’s September month trade data for fresh clues amid a lack of major data at home and the US holiday. Market consensus favors a downbeat Trade Balance figure of $33.30B versus $34.83B (revised) with an expected recovery in Imports to -5.2% from -5.6% confronting the likely downbeat Exports growth of -3% compared to -1% prior.

Technical Analysis

The quote needs a successful break above the 50-day exponential moving average (EMA), at 0.6800 now, in order to aim for 0.6850/55 and September month high near 0.6900. Failure to do so can drag the pair back to early-month highs close to 0.6770 prior to flashing 0.6730 and 0.6700 on the sellers’ radar.