The Australian dollar is crawling off the mat as the greenback starts to soften

• The Australian dollar continues to crawl higher, helped by softer US economic data and renewed hopes for a trade deal being reached between the United States and China.

• The Commonwealth Bank says the AUD/USD "is unlikely to slide to fresh 2019 lows without a specific catalyst".

• Both the United States and United Kingdom will be off on Monday for a long weekend. The economic events calendar is therefore quiet.

---

The Australian dollar is inching higher in early trade on Monday morning, continuing the modest rebound that began late last week.

Here's the scoreboard at 7.50am in Sydney. Data is provided by Refinitiv.

AUD/USD 0.6928 , 0.0005 , 0.07%
AUD/JPY 75.74 , 0.22 , 0.29%
AUD/CNH 4.7909 , 0.0113 , 0.24%
AUD/EUR 0.6179 , 0.0008 , 0.13%
AUD/GBP 0.5445 , 0.0014 , 0.26%
AUD/NZD 1.0567 , 0.0022 , 0.21%
AUD/CAD 0.9312 , 0.0003 , 0.03%

After testing the low of .6865 struck on May 19 on several occasions last week, the AUD/USD currently trades at .6928, helped by weaker-than-expected US economic data released on Thursday and Friday and a modest improvement in sentiment towards the prospects of a trade deal being eventually reached between the United States and China.

"US April durable goods orders only missed estimates by a small amount. However, downward revisions to March gave a decidedly more negative profile to the volatile data series," said Westpac strategists in a note released on Monday.

"This raises downside risks for both Q1 and Q2 GDP."

Further helping the Aussie's cause, US President Donald Trump said on Friday that there remained a “good possibility” that the negotiations with Beijing could get back on track and that he would met with Chinese President Xi at the Osaka G20 summit, according to analysts at the National Australia Bank in a note.

Image: Investing.com

Combined with a softer US dollar, Richard Grace, Chief Currency Strategist at the Commonwealth Bank, says the prospect of a trade deal, even if deemed remote, should be enough to prevent the AUD/USD sliding to fresh lows in the near-term.

"AUD will be guided by trade tensions, global growth concerns and expectations for 2019 RBA rate cuts," Grace said in a note released on Monday.

"However, AUD is unlikely to slide to fresh 2019 lows without a specific catalyst."

Grace notes that financial markets now expect the US Federal Reserve to cut its funds rate by 75 basis point by the end of next year.

"In our view, strong Australian commodity prices are providing some support to AUD, as is limited USD upside."

Turning to the day ahead, trade-related headlines and tweets look set to dominate proceedings with both the United States and United Kingdom off for a long weekend.

With those major markets offline, the economic events calendar is light on Monday. The main highlights will come from speeches from Bank of Japan Governor Kuroda and ECB Executive Board member Benoit Coeuré.