The AUD/USD climbs during the North American session off weekly lows around 0.6880s despite investors’ mixed mood due to increasing tensions post-US House Speaker Pelosi’s visit to Taiwan, with China’s military drills deploying missiles and more than 100 planes, as a response to the trip.

The AUD/USD is trading at 0.6972 after dipping to its daily low at 0.6934 early in the Asian Pacific session. Still, as North American traders got to their offices, the Aussie strengthened, and the major hit a daily high at 0.6989 before settling around current exchange rate levels.

AUD/USD ascends, despite positive US data

US equities wobble as sentiment remains fragile. Based on mixed US economic data, AUD/USD dived from daily highs towards 0.6945. Initial Jobless Claims for the week ending on July 30, uptick to 260K, higher than 259K estimated, illustrating that the labor market is loosening. At the same time, the Balance of Trade in the US witnessed a shrinking in the US deficit to -$79.6 B from -$80.1 B estimations, while Exports jumped in comparison with imports.

Even though US data keeps the traders hopeful of missing a recession, the AUD/USD bounced off once analysts digested data, but the major was unable to reach its daily high.

In the meantime, the US Dollar Index, a gauge of the buck’s value vs. a basket of peers, tumbles 0.50%, at 105.867, underpinned by falling US Treasury yields, led by the 10-year benchmark note coupon at 2.674%, down by three basis points.

On the Australian side, the Trade Balance hit a surplus of A$17.7 B in July, from A$12.3 B in June. Australia has benefitted from Iron ore, LNG gas, and coal exports. Nevertheless, its biggest trading partner, namely China, has been trying to limit its reliance on coal imports, and its steel output will weaken late this year.

Analysts at ANZ commented that “Given this and the fact that commodity prices appear to have peaked, we think the trade surplus will soon start to slide.”

What to watch

The Australian docket will feature the Reserve Bank of Australia (RBA) Statement of Monetary Policy alongside the AIG Services Index.

The US economic calendar will feature July’s Nonfarm Payrolls estimated at 250K, less than June’s 372K. The Unemployment Rate is expected to persist unchanged at 3.6%.

AUD/USD Key Technical Levels