There was some more positive news on the Chinese front today, ahead of the phase one deal to be signed this week.
Rumours circulating today, suggest that the Chinese are preparing to buy $200 billion of U.S. goods over a two-year period, with significant purchase in both the energy and agricultural sectors.
Clearly this is a positive outcome for both countries ahead of the signing which is due to take place on Wednesday this week.
That said, prices in the key Asian pairs are falling this morning.
As I pointed out yesterday, it does feel like the price action is a little directionless at the moment, particularly from the Aussie’s perspective.
As it happens, we are actually in a short AUD/USD position. As we can see on the chart below, things are starting to look pretty good for this one.
In fact, the chart is really looking like it has made a bit of a head and shoulders pattern.
After the failure of price to push above the 0.6900 and 0.7000 levels in any meaningful way, the bears have taken back control. Or similarly, there just wasn’t enough buying interest at higher levels.
So now the downside target is clearly 0.6850. If that level drops then I really expect to see some sharp selling in the Aussie.
The trade deal could be one such situation, which while positive news, could bring about a buy the rumour sell the fact, tumble in price of risk assets.