The AUD/USD pair regained some positive traction on Wednesday and is currently placed at session tops, around the 0.6740 region, albeit lacked any strong follow-through.
Following the overnight pullback and a brief consolidation during the early Asian session, the pair caught some fresh bids on Wednesday and seemed rather unaffected by the disappointing release of Westpac Consumer Sentiment Index. A subdued US Dollar price action helped offset the weaker data and turned out to be one of the key factors lending some support to the major.
Trade pessimism might cap gains
However, renewed US-China trade pessimism might hold investors to place any aggressive bullish bets. The US imposition of visa restrictions on Chinese officials, together with the blacklisting of Chinese firms over the treatment of Muslim minorities threatened to derail already delicate trade talks and should and cap any strong gains for the China-proxy Australian Dollar.
This coupled with a sharp deterioration in the global risk sentiment, which tends to benefit the Greenback's relative safe-haven status and drive flows away from perceived riskier currencies - like the Aussie, might further contribute towards keeping a lid on any runaway rally for the major.
Hence, it will be prudent to wait for a sustained move beyond the 0.6765 region before positioning for any further near-term appreciating move as the focus now shifts to Wednesday's key release of the FOMC monetary policy meeting minutes. Ahead of the key event risk, a scheduled speech by the Fed Chair Jerome Powell might provide some short-term trading impetus.