AUD/USD eases towards 0.7400 but bulls are not out of woods

• AUD/USD looks for fresh clue after consolidating recent gains in last two days.
• Aussie-China, Sino-American tussle are back in focus to combat vaccine, stimulus hopes.
• Brexit woes, mixed China data and a sustained rise in virus cases challenge the bulls.
• Australia’s Q3 House Price Index, NAB Business Confidence and Business Conditions for November will decorate the calendar.

AUD/USD retraces gains from the highest since July 2018 since Friday, currently around 0.7420 at the start of Tuesday’s Asian session. The US dollar’s bounce off a multi-month low can be traced to the latest pullback in the pair. However, challenges to risks emanating from the US covid stimulus talks and Brexit negotiations, not to forget infection resurgence and tension surrounding China, could be better cited as reasons to weigh on the quote.

Cautious sentiment before the key event announcements…

Be it the US policymakers’ battle for the much-awaited coronavirus (COVID-19) stimulus or the drama concerning Brexit, both the issues have probed market sentiment off-late and are near to the decision. However, nothing is sure yet and hence the mood remains mostly cautious.

US House members are inching closer towards a one-week stopgap funding as Senate members are yet to set aside their political differences over the major stimulus bill. On the other hand, the European Union (EU) and the UK’s Brexit negotiators are giving the last-ditched efforts even if differences over the key issues, like fisheries and level playing field continue.

Elsewhere, COVID-19 cases in the US continue to surge while the vaccine developments are positive outside the US. Russia announced the distribution of its vaccine while China’s Sinovac showed readiness to increase the production of the much-needed cure to the pandemic.

The US-China tussle is back in focus with the Trump administration said to be announcing more sanctions on China’s Communist Party (CCP) members over the Hong Kong crackdown while Beijing stays ready to retaliate. Further, the dragon nation announced another trade-negative measure, this time restricting beef from the Aussie supplier, to mark its anger to the Western alliance.

Moving on, updates concerning the US stimulus and Brexit will be the key while headlines relating to China and vaccine will also be important. On the data front, Australia’s Housing Price Index for the third quarter (Q3) is expected to recede from -1.8% to -1.0% while the National Australia Bank’s (NAB) Business Confidence and Business Conditions should overcome the previous 5 and 1 figures to recall the AUD/USD buyers.

Technical analysis

Unless declining below a five-week-old ascending trend line, at 0.7360 now, AUD/USD sellers can stay away. Meanwhile, July 2018 top near 0.7485 remains on the bull’s radar until the quote remains beyond the 0.7400 threshold.