AUD/USD touches fresh session high above 0.6750, retreats ahead of US data

• China calls upon US to resolve issue via calm attitude.
• US Dollar Index climbs to fresh six-day highs above 98.30.
• Coming up: Goods trade balance and second-quarter GDP data from US.

The AUD/USD pair fell to a daily low of 0.6716 during the early trading hours of the European session but reversed its course and turned positive on the day on the back of some optimistic comments from China regarding the trade dispute with the United States.

Dismal data weigh on AUD

After climbing to 0.6753, however, the pair has gone into a consolidation phase as investors are moving to the sidelines while waiting for the day critical macroeconomic data releases from the United States. At the moment, the pair is up 0.45% on the day at 0.6745.

Earlier today, the ANZ's Business Confidence Index dropped to -52.3 in August from -44.3 while the Activity Outlook in the same period slumped to -0.5% from 5% to weigh on the AUD. Additionally, the Australian Bureau of Statistics reported that capital expenditures in the second quarter contracted by 0.5% and fell short of the market expectation for an expansion of 0.5%.

 Although the disappointing data weighed on the AUD, the latest comments from China on the trade conflict allowed market sentiment to recover and helped antipodeans find demand. Chinese Commerce Ministry Spokesman Gao today told reporters that they were hoping that the US will meet China halfway on trade issues and called upon Trump administration to remove the new tariffs to avoid an escalation of the trade war.

On the other hand, the US Dollar Index rose to its highest level in six days at 98.32 today supported by the recovery seen in the Treasury bond yields. Later in the day, the US Bureau of Economic Analysis will publish its second estimate of the second-quarter GDP growth.

Technical levels to watch for