AUD/USD struggles around 0.6980 as US tariffs on China can take place from Friday, RBA awaited

USTR Lighthizer and Treasury Secretary Mnuchin confirm President Trump’s threat to Chinese goods.
China remains ready to arrive in Washington for trade talk.
RBA is also in the focus.

Anil Panchal FXStreet

The AUD/USD pair opened a shade lower for trading on Tuesday’s Asian session around 0.6980 as comments from the US lawmakers signaled that the President Trump’s rate hike threats could be real from Friday.

The US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin crossed the wires on early Tuesday.

As per Reuters, both the frontline US negotiators have confirmed that the recent threat given by the US President Donald Trump to increase tariffs on Chinese goods worth of $200 billion from 10% to 25% could be real if both the countries fail to reach a deal by Friday.

Mr. Lighthizer was quite downbeat with the change in China’s tone in negotiation and conveyed that they have seen an erosion in commitments from China while Mr. Mnuchin said China moved away from the language in the agreement that would have changed it substantially.

However, both the US lawmakers confirmed that the Chinese delegation comprising Vice Premier Liu He will arrive in Washington for further talks on Thursday and Friday.

The Reuters report said that the policymakers confirmed their unified support in recommending to trump that the US go ahead with tariffs if there is not an agreement by Friday.

While news report signaling that the US is ready to go ahead with its tariff hike renewed risk aversion, some found solace in the piece that Chinese lawmakers are still positive to the deal and may result in a good outcome.

In addition to the US-China trade deal developments, today’s slew of headline data/events including the Reserve Bank of Australia (RBA) meeting, will be in the spotlight.

The RBA is more likely to cut its benchmark overnight cash rate by 25 basis points (bps) considering the latest shift in top-tier economics.

Technical Analysis

Considering the fact the at the pair refrained from dipping beneath late-January 2016 lows near 0.6970, chances of its pullback towards 0.7030 and 0.7055 are much brighter given its ability to cross 0.7000 mark.

In a case where prices slip beneath 0.6970 support, 0.6920 and the year 2016 bottom near 0.6820 can gain bears’ attention.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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