Flat Finish Belies Commodity Weakness

AUD/USD finished flat in a fairly uneventful session , the pair dropped as low as 0.7688, the low of the week, before recovering to close at 0.7730, the pair last flat on the session. The commodity complex struggled on Thursday, iron ore dropped almost 6%. Earlier this week Chinese Premier Li said higher commodity prices would have to be dealt with, which follows an increase in trading limits for iron ore and an increase fees for steel and coking coal after another jump in PPI in China.

• Australia is seeking to thaw frosty relations with China, Foreign Minister Payne said that Australia is ready to resume a dialogue with China and seeks a constructive relationship, but acknowledged challenges. The comments come after China's Commerce Ministry said that ending activities under the China-Australia economic dialogue was necessary, and that Australia should treat Chinese companies fairly.
• From a technical perspective AUD/USD started the week well, but traded poorly Thursday, hitting new weekly lows of 0.7688 and denting the outlook further. This comes despite the pair recently clearing the April highs, which had triggered bullish signals. In order for the uptrend to resume, markets need to top the 76.4% retracement of the February - April downtick at 0.7895. A break here would strengthen bullish conditions and point the needle toward the year's best levels printed in late February at 0.8007.
• No domestic economic releases on the docket today, markets await RBA minutes on Tuesday.