Oct 7 (Reuters)The Australian dollar has recouped some of Tuesday’s 1.1% losses that were largely driven by broad USD gains amid a rise in risk aversion, but was the dip a buying opportunity or more likely, the start of a deeper decline?

The risk selloff was prompted by President Trump’s decision to end coronavirus stimulus negotiations even as Federal Reserve Chairman Powell expressed fears of the economic recovery stalling .

There is every chance that the breakdown in negotiations will take time to be fully priced in, which will increase uncertainty, and should support the safe-haven USD, while the AUD was already heavy on market expectations that the RBA may ease policy in November .

AUD/USD is closer to the top of its 0.5510-0.7413 2020 range, as is the trade-weighted index =AUD at 61.10, in a 49.90-62.90 2020 range, so the AUD is strong at these levels.

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