- AUD / USD struggled to build on the positive intraday positive movement from the previous day.
- A softer risk tone capped gains, with trade optimism between the US and China helped to limit the decline.
- Investors are watching US durable goods orders for a boost ahead of Powell’s speech.
AUD / USD did not have a firm directional bias on Wednesday and remained confined in a range around 0.7200 during the Asian session.
The pair failed to capitalize on the previous day’s goodish rebound of around 50 pips from the mid 0.7100 and witnessed moderate / range-linked price action throughout the first half of trading on Wednesday. A slight deterioration in global risk sentiment was seen as one of the main factors that caps the rise in the Australian dollar, which was seen as riskier.
Tuesday’s disappointing publication of the U.S. Consumer Confidence Index fueled concerns about the U.S. economic recovery and partly offset optimism about a potential vaccine / treatment for highly contagious coronavirus disease. This, in turn, weighed on investor sentiment and drove some safe haven flows into the US dollar.
However, appeasing concerns about a diplomatic standoff between the United States and China has given the Aussie some support. This, coupled with investors’ reluctance to place aggressive bets ahead of Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium, could further help limit any significant slippage for the AUD / USD pair.
Therefore, it will be prudent to wait for strong follow-up sales before positioning for any further depreciation. Even from a technical standpoint, the pair, so far, has managed to defend support marked by the lower bound of a one-month ascending trend channel, warranting some caution for bearish traders.
Market players are now eagerly awaiting the US economic calendar, highlighting the release of durable goods orders. The data could influence USD price dynamics and provide some near-term trading momentum later in the start of the North American session.