AUD/USD in Focus as Chinese Delegation Arrives in Washington
- AUD/USD in focus as China and US continue negotiations
- Huawei scandal and arrest of CFO may weigh on the talks
- Clock is ticking on reaching an agreement before deadline
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The Australian dollar will be closely monitored this week as the Chinese delegation led by Vice Premier Liu He arrives in Washington. He will be meeting with Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. This comes after a US delegation visited Beijing and attempted to make headway on trade relations.
This is also coming on the heels of the release of Australia’s NAB Business Confidence Survey. The data fell short of expectations and sent the Aussie lower.
Efforts to reach an agreement might be further complicated after the US Department of Justice filed an indictment against Chinese tech giant Huawei after the arrest of its CFO Meng Wanzhou. She was arrested in Canada, and the US has formally requested extradition for her to face criminal charges in the US.
Both countries are facing their own domestic obstacles. The US only recently ended the longest-recorded government shutdown that ended up costing the economy billions of dollars. Economic data coming out of China has signaled that the Chinese economy is slowing with the help of the trade wars weighing on performance. There is also the issue of a rising default on corporate debt.
Against this backdrop, the Australian Dollar may be particularly sensitive, given the intensity of the situation and the approaching March 1 deadline before Trump could impose tariffs up to 25 percent. If talks between Beijing and Washington go poorly, selling pressure is likely to gain momentum.
AUD/USD – One-Hour Chart
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--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitri on Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.