AUD/USD: The impact of Xi-Biden's San Fran face-off

The AUDUSD and NZDUSD led the rally against the US dollar yesterday and are doing the same again today.

The surprising low inflation number from the US is what caused the rally yesterday. But today we have a new event that could be driving sentiment in these pairs. This event is still underway, so it still to play out completely, and its consequences still to be digested and figured into the market: This event is the meeting of Chinese President Xi Jinping and US President Joe Biden in San Francisco.

The meetings represent a cooling of trade (and otherwise) tensions between the two countries.

What next?

A weak support has been established around 0.64828. I would like to see the pair probe for a close closer to 0.65400 before concluding that there is a definite bullish bias. We will be watching news reports about the mood of the meeting and any outcomes to gain an understanding of the fundamental drivers for the AUD.