AUD/USD churning near 0.71 ahead of Chinese CPI/PPI dump
|- Aussie bulls on the defensive as the pair hits new lows.
- Trade headlines to dominate the week as AUD traders brace for Chinese inflation reading.
The AUD/USD touched into a new thirty-month low of 0.7098 last Friday as the US Dollar rebounded across the broader marketscape, and the Aussie opens up the new trading week near 0.7910 after Friday's Non-Farm Payrolls spurred the Dollar higher.
The US Dollar continues to build on worsening trade tensions between US President Trump's administration and almost all of the US' major trading partners, and the AUD has become incredibly over-populated as a short position; a sudden relief break in trade negotiations could see a brief rally in the Aussie as USD-based risk flows back off, but Monday will first be coping with knock-on volatility from China's regular CPI/PPI showing, due today at 01:30 GMT.
China's latest inflation reading is expected to show a soft improvement over the previous iteration, with the y/y CPI into August forecast at 2.2% (previous 2.1%), and August's m/m expected at 0.5% (previous 0.3%); extra focus will be on China's growth figures with the US expected to be delivering another round of tariffs any day now, and with China's y/y PPI into August anticipated to decline to 4.0% (last 4.6%), bad news could carry a heavier weight than normal as investors balk at downside ripples from trade wars.
The early week sees Australia taking a break from the economic calendar, but this Thursday will be seeing down under's latest jobs report on Thursday, and Aussie bulls will be hoping for an improved read in the seasonally-adjusted Employment Change, which last printed a disappointing -3.9 thousand.
AUD/USD levels to watch
With the Aussie breaking into a new 30-month low, there's nowhere to go but down, according to FXStreet's own Valeria Bednarik: "despite extremely oversold, there are no technical signs that the pair has found a bottom. The bearish momentum remains firmly in place, with speculative interest now eyeing January 2016 low, at 0.6826 as the next big bearish target. In the meantime, technical readings in the daily chart support a downward extension for this Monday, as indicators approach oversold readings with almost vertical slopes, as the price continues declining away from sharply bearish moving averages. In the shorter term, and according to the 4 hours chart, the risk is also skewed to the downside, as the pair finished well below its 20 SMA after struggling mid-week to surpass it, while technical indicators maintain their sharp downward slopes well into negative territory."
Support levels: 0.7095 0.7065 0.7030
Resistance levels: 0.7140 0.7180 0.7210
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