AUD/USD recovers from one week low to 0.6795 amid the initial Asian session on Monday. The pair recently benefited from the early results of Hong Hong’s local elections but gains are in check amid doubts over the US-China phase two deal.
District elections in Hong Kong sow more than 70% voter turnout. CNN says that the majority of the 18 district councils expected to flip to pro-democratic control in an “unmistakable message” to the city’s leader Carrie Lam.
Markets cheer the victory of Hong Kong’s Democratic candidates as it will lead to an end to prolong protests in the region. However, the government’s steps to keep the power, backed by China, could still raise fears of the United States (US) intervention and further escalation of trade tension between the US and China.
Also checking the trading sentiment is the Reuters’ news, relying on officials from the US and China, which says, “An ambitious phase two trade deal between the United States and China is looking less likely as the two countries struggle to strike a preliminary phase one agreement.”
The latest comments from the US President Donald Trump increased odds of a phase one deal but tensions over Hong Kong keep looming and push the traders to remain cautious amid a light economic calendar.
That said, the US 10-year treasury yields stay positive around 1.773% while S&P 500 Futures remain 0.25% positive around 3,120 level.
Given the lack of major catalysts from the data/event side, Tuesday’s speech from the Reserve Bank of Australia’s (RBA) Governor Philip Lowe and Deputy Governor Guy Debelle will be the key to watch. Though, second-tier sentiment and activity numbers from the US could offer intermediate moves.
AUD/USD LONG (Buy)
ENTER AT: 0.6793