• AUD/USD has run into the 21-DMA following a risk-on session overnight.
  • Trae talk sentiment flipped positive and supported the commodity currency.

AUD/USD is consolidated in early Asia following volatility overnight on a series of trade talks headlines that drove the Aussie both ways. AUD/USD is currently trading at 0.6757 having travelled between 0.6710 and 0.6774 overnight.

Casting minds back to yesterday's early Asia session, the pair was falling on the back of the pessimistic South China Morning Post news that said Chinese negotiators would end the talks earlier than scheduled, bemused by the US State Department's blacklisting of Chinese companies. However, the Aussie was back in favour when Bloomberg and NY Times stories, quite to the contrary, argued that a partial deal was being drawn up between the two sides and that meetings will go ahead as planned. There were easing of restrictions on Huawei being reported as well. Trump tweeted that China “want to make a deal” and that he intends to meet the Vice Premier on Friday.

Central Bank focus and next key data

Elsewhere, one eye is being kept on central banks beyond the blur of trade talk noise. "Markets are pricing 12bp of easing at the 5 Nov RBA meeting, and a terminal rate of 0.36% (RBA cash rate currently at 0.75%)," analysts at Westpac noted.

With respect to the Federal Reserve, data overnight will have ben monitored that arrived in the form of US Sep headline Consumer Price Index was flat mom, with ex-food and energy +0.1%mom, missing estimates of +0.1%mom and +0.2%mom respectively. The annual pace of CPI remained at 1.7% (expected 1.8%), ex-food and energy remaining at +2.4% (as expected). US 2-year Treasury yields climbed from 1.44% to 1.54%, the 10-year yield from 1.56% to 1.67%. "Markets are pricing 18bp of easing at the 31 October meeting and a terminal rate of 1.04% (vs 1.88% currently)," analysts at Westpac explained.

Looking ahead, the calendar is quiet today to the week, but traders will now await the next round of key data releases from Australia and next week will bring the Reserve Bank of Australia's October minutes Tuesday and September labour force survey on Thursday.

AUD/USD levels

Bulls have run up to the key 21-Day moving average (DMA) and have eyes set on an advance to the 0.68 handle and confluence with the 50-DMA.