AUD/USD fell from the three-month high hit earlier in the session as dovish interpretations of Fed chief Powell's comments proved a double-edged sword and market trepidation ahead of the Trump-Xi talks also stymie the aussie. While U.S. Treasury yields extended their recent slide, Australian government bond yields have fallen at a quicker pace.
As a result, Australian-U.S.
spreads have widened further in the greenback's favor, making it less attractive to short the U.S. dollar.
Lingering U.S.-Sino trade concerns are also tempering the enthusiasm of AUD/USD bulls as well.
President Trump said, "I think we're very close to doing something with China but I don't know that I want to do it." That statement raised enough doubt to halt AUD/USD's rise and erode gains.
Investors were left to wonder if Trump's statement was a tactic to gain leverage ahead of this weekend's G20 meeting.
Should the meeting between Trump and Xi result in green shoots on trade issues AUD/USD is likely to gain on the assumption that risk markets will rally.
Net-short aussie and net-long U.S. dollar positions will likely be reduced in that case.
AUD/USD could then test the 200-DMA and big 0.7480/00 resistance.
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