There may have been progress in US/China trade talks, but the Australian dollar could still slide this week.
Hopes that the meeting between US President Donald Trump and China President Xi Jinping would ease trade tensions lent the Australian dollar support for much of last week.
Further AUD support came from slightly more upbeat comments from the Reserve Bank of Australia (RBA) and Reserve Bank of New Zealand (RBNZ).
The Australian dollar closed out the week in a stronger position against both the pound and US dollar.
However, AUD failed to extend gains on reports that the US and China reached a tentative trade truce after the G20 Summit.
Demand for the ‘Aussie’ was tempered as China’s Manufacturing PMI gauge fell from 50.2 to 49.4 in June.
Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group, said: ‘China’s economy came under further pressure in June. Domestic demand shrank notably, foreign demand was still underpinned by front-loading exports, and business confidence fell sharply.’
The Australian dollar was also struggling ahead of Tuesday’s Reserve Bank of Australia (RBA) policy decision.
The central bank cut borrowing costs at its last gathering and some economists believe that rates will be cut to new record lows.
If that proves to be the case the Australian dollar could slide as the week continues.
Australian services, trade and retail sales data could also have an impact on AUD this week.