- Mexico’s readiness to avoid trade tension with the US reflects a mirror image of China’s latest actions.
- Domestic data and China’s manufacturing gauge in the spotlight for now.
Despite recovering from 0.6900, the AUD/USD pair is far from clearing 0.6950 resistance as it trades near 0.6930 during the early Asian session on Monday.
Challenges to global trade have been on the rise ever since the US announced tariffs on Chinese products. The latest wave was triggered by the Trump administration’s tough stand against Mexico. Though, Mexican President Andres Manuel López Obrador showed readiness to tame the reason for the punitive measures, illegal migration to the US, during an upcoming visit to Washington.
With Australia being the export-oriented economy, negatives for global trade and/or their largest customer China have a pessimistic impact on the Australian Dollar (AUD). However, the Aussie pair recently bounced off as the US Dollar (USD) weakened across the board.
AUD/USD is also considered as market risk barometer like the US 10-year treasury yield that recently tested 20-month bottom to 2.133%.
Looking forward, domestic company gross operating profits for the first quarter and ANZ job advertisements for May can offer intermediate moves ahead of China’s Caixin manufacturing PMI.
Forecasts suggest a 3.0% increase in company profits from 0.8% while job advertisements shrank -0.1% previously. Further, China’s private manufacturing index may flash no activity increase mark of 50.00 against 50.2 prior.
It should also be noted that China maintains its tough stand to retaliate the US actions as it recently prepared a list to put some headline companies from the US on restrictions to trade.
Sustained break of 0.6950 becomes necessary for the AUD/USD pair to aim for 0.7000 and 50-day simple moving average (SMA) level of 0.7025.
On the contrary, 0.6900 and 0.6860 act as immediate important support, a break of which can recall the year 2016 low near 0.6830.