AUD/USD clings to modest recovery gains, lacks follow-through
- AUD/USD stages a modest bounce from mid-0.6900s, three-week lows.
- Upbeat domestic trade data remained supportive of the recovery movement.
- Softer Chinese inflation figures did little to provide any additional boost.
The AUD/USD pair edged higher during the Asian session on Thursday, albeit lacked any strong follow-through and remained below the 0.6900 handle.
The pair stalled its recent sharp pullback from multi-month tops – levels beyond the key 0.70 psychological mark – and staged a modest recovery from three-week lows amid improving global risk sentiment.
The upside remains limited
The de-escalation of geopolitical tensions in the Middle East remained supportive a fresh wave of the risk-on trade, which eventually provided some immediate respite to perceived riskier currencies – like the Aussie.
Tensions between the US and Iran ease significantly after the US President Donald Trump on Wednesday announced fresh sanctions on the Islamic Republic and signalled there would be no further military action.
The uptick was further supported by upbeat Australian Trade Balance data, which showed a rise in surplus to 5.80 billion in November as compared to the previous month's downwardly revised reading of 4.08 billion.
Meanwhile, softer Chinese inflation figures – CPI and PPI prints for December – did little to dent the sentiment, albeit turned out to be the only factor capping gains for the China-proxy Australian dollar, at least for now.
Moving ahead, there isn't any major market-moving US economic data due for release on Thursday and hence, the USD price dynamics/broader market risk sentiment might continue to act key determinants of the pair's momentum.
Technical levels to watch