AUD/USD: 21-DMA questions further recovery amid a lack of fresh clues

• AUD/USD fails to extend earlier run-up beyond 21-DMA as traders doubt recent risk-on amid a lack of fresh clues.
• A speech from the RBA’s Debelle, US data and trade headlines will be in the spotlight.

With the absence of fresh catalysts raising doubts on recent recovery, the AUD/USD pair struggles around 21-day simple moving average (DMA) while taking rounds to 0.6780 during early Asian morning on Tuesday.

The Australian Dollar (AUD) turned out to be the biggest G10 gainer after the US and China increased odds of calm trade negotiations in spite of escalating the trade war concerns on Friday. Market sentiment got additional support from trade positive headlines concerning Japan, France and the US.

As a result, the equities remained in green at the Monday’s end while currencies also witnessed a pullback from the day-start slump in riskier assets. Further, the US treasury yields also recovered with the 10-year note offering 1.538% by the press time.

Even so, some among the Chinese fraternity, including the Global Times’ editor-in-chief Hu Xijin, doubted the US President Donald Trump’s claim of Chinese call for a truce and pushed market players to wait for fresh signals for confirmation.

Among the scheduled catalysts, speech by the Reserve Bank of Australia’s (RBA) Deputy Governor Guy Debelle will be the first one to follow whereas the US Consumer Confidence and Richmond Fed Manufacturing Index will entertain momentum traders afterward. It should also be noted that trade news can keep holding their key position to fuel market momentum.

While traders will seek clues for the RBA’s future policy moves from Debelle’s speech at the Economic Society of Australia Luncheon, the US data might follow the recent trend of flashing mixed signals.

As for the US data, TD Securities said, “The Richmond Fed manufacturing index is expected to register its first improvement in six months with a 10pt gain to -2 in August. The index was as high as 14 back in February but has since declined to -12, in line with the ongoing woes in the manufacturing sector. Separately, the Conference Board's consumer confidence index is expected to have given back some of its July gain, dropping to a still strong 129 level in August from 135.7 before.”

Technical Analysis

21-DMA, at 0.6782 has been limiting the pair’s upside since more than five weeks and may again prove its worth to pull the quote back towards 0.6736 level comprising lows marked on August 14 and 23.