FXpro

AUD/USD was relatively sidelined overnight, with no real risk-on/risk-off theme established in global markets.

The pair finished the session flat at 0.9838. Both risk assets and risk currencies proved to be resilient for much of Tuesday, despite signs of intensifying stress in the eurozone debt markets and weaker-than-expected US GDP data. There was significant positive news flow, which managed to hold up risk assets. The IMF offered a new credit to address contagion risks and the Fed minutes showed that some are favouring a further easing of monetary policy. The IMF credit line boost proved short-lived, as it is similar to the rarely used Precautionary Credit Line (PCL) it replaces and it would be available to those countries with relatively strong policies that are being impacted by the fallout, rather than countries at the epicentre of the crisis.

On the economic front, traders will be looking out for China’s HSBC flash manufacturing PMI data due out at 1.30pm today. This could be a catalyst to how risk assets trade today. There seems to be a solid base established at around 0.98. This could be a platform for AUD/USD to recover should the China data present a positive catalyst. However, the pair is still in a short-term downtrend and most traders will be favouring selling into any strength.