AUD/USD in search of a firm direction, stuck in a range around mid-0.6800s

• Renewed US-China trade optimism provided a minor lift to the aussie on Wednesday.
• AUD/USD bulls failed to capitalize amid weaker than expected domestic macro data.

The AUD/USD pair edged lower during the Asian session on Thursday, albeit remained well within the previous session's broader trading range.

A Bloomberg report indicated that the US and China are moving closer to agreeing on the amount of tariffs that would be rolled back in a phase-one trade deal despite tensions over Hong Kong and Xinjiang. Renewed trade optimism provided a modest intraday lift to the China-proxy Australian dollar and prompted some intraday short-covering move around the major.

The downside seems limited, at least for now

The pair managed to reverse an early dip to 100-day SMA support, led by softer Aussie GDP growth figures and finally ended near the top end of its daily trading range. The uptick, however, lacked any strong follow-through and fizzled out rather quickly in reaction to the weaker-than-expected Aussie macro releases – monthly retail sales and trade balance figures.

According to the data released this Thursday, retail sales missed consensus estimates and remained flat month-over-month in October. Adding to this, Australia's trade surplus also narrowed to A$ 4,502 million in October as compared to a drop to A$ 6,100 million expected and A$ 7,180 million recorded in the previous month, primarily on the back of a 5% drop in exports.

Meanwhile, the downside remained limited, at least for the time being, and was being cushioned by a subdued US dollar price action. As investors digested the latest trade-related headlines, a modest pullback in the US Treasury bond yields, coupled with Wednesday's disappointing US macro data kept the USD bulls on the defensive and extended some support to the major.

It, however, remains to be seen if the pair is able to attract any meaningful traction or the range-bound trading action over the past two trading sessions mark the end of this week's goodish positive move. Moving ahead, Thursday's second-tier US economic releases – initial weekly jobless claims and trade balance data – will now be looked upon for some short-term trading impetus.

Technical levels to watch