The Australian dollar has rebounded after a senior White House official walked back comments that seemed to imply the US-China trade deal might be over and triggered a wave of risk aversion in Asian markets.

The currency took a sudden spill when White House trade adviser Peter Navarro told Fox News the US deal with China was “over”.

However, Navarro later said the comment was not all it seemed and that he had been trying to make a broader point about trust. He also said the trade deal remains “in place”.

Dealers were always unsure how serious the comments were, but if the deal were to actually collapse investors would likely fear a renewed US-China trade war which could hurt Australia as a major exporter to China.

As the dust settled, the Aussie dollar was back up at 69.21 US cents having sunk as deep as 68.58 US cents at one stage. It still has solid support at 68.00, while resistance lies at 69.77 and the recent 11-month top of 70.69 US cents.

At home, a surprisingly upbeat survey of Australian businesses showed activity was recovering from the lockdowns of April and May.

In particular, the CBA-Markit PMI for services surged to 53.2 in June, after plunging to just 25.5 in May,

“The June PMIs are consistent with our view that we are now past the low point in economic activity,” said Gareth Aird, head of Australian economics at CBA.

“Overall conditions in the private sector are still very soft, but there were a few encouraging pieces of information in the PMIs.”

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