• Soaring gold prices and a weaker greenback pushed AUD/USD to a fresh yearly high.
  • Chinese data indicates that the local economy continues to recover.
  • AUD/USD retreated from highs but maintain its long-term bullish bias.

The AUD/USD pair hit 0.7242 this week, its highest since February 2019, trimming most gains ahead of the close but still holding in the green weekly basis. The pair rallied on the persistent sell-off of the American currency, and soaring gold prices, which underpinned the Aussie.

Focus on US turmoil

Speculative interest saw no reason to buy the greenback, amid US turmoil in different fronts. Not only data continues to suggest that the economy keeps contracting, but also political tensions escalate, within and abroad. The US Congress has been unable to agree on a new aid package, while US President Trump renewed his attacks on China, issuing an order banning TikTok and WeChat from operating in the US in 45 days if they are not sold by parent Chinese companies.

By the end of the week, news suggested that the US administration is considering expanding its actions against China, potentially sanctioning 11 individuals, including Hong Kong leader Carrie Lam. The headline gave a temporal boost to the greenback, but nothing that could change its dominant bearish stance.

Despite the pandemic hasn’t ignored Australia, the situation in the country is much better than abroad. The country has been reporting an average of 350 new cases during the last couple of weeks, with the Victoria area still in lockdown. The country has reported a total of roughly 20,000 cases since March, and the death toll reached 266.

China keeps reporting economic improvement

Macroeconomic data coming from Australia these days, reflect the better shape of the local economy, despite the fact that it’s far from optimal. Nevertheless, the economic machine continues working in the country. Manufacturing output and services activity remained in expansion territory throughout July, according to the latest numbers, while Retail Sales surged 2.7% in June. In this last month, the Trade Balance posted a surplus of 8202 million, improving from the previous monthly figure, although below expected.

China data also indicated economic growth, as the Caixin Services PMI printed at 541 in July, while the Trade Balance for the same month posted a larger-than-anticipated surplus of $63.33B. As long as the Chinese economy expands, Australia will continue to have a place to allocate its production.

The week ahead will bring Chinese inflation data on Monday, although the key day will be Friday when the Asian giant will publish July Industrial Production and Retail Sales. Australia will unveil some confidence indicators, although attention will be on the employment sector, as the country will publish quarterly wages on Wednesday and the monthly employment report on Thursday.

AUD/USD Technical Outlook

The AUD/USD pair is trading around 0.7170 as the week comes to an end, and the weekly chart shows that it maintains its bullish bias after nearing a critical threshold, the 200 SMA. In the mentioned time-frame, the pair has steadily advanced above its 100 SMA, while the 20 SMA gains bullish traction below it. Technical indicators are stable near overbought readings, with no signs of upward exhaustion.

Daily basis, the risk of a steeper decline seems limited, as the pair remains above a bullish 20 DMA, while the 100 DMA is about to cross above the 200 DMA, both far below the current level. Technical indicators have turned lower within positive levels, rather following the price than anticipating an upcoming decline.

A relevant support level comes at 0.7060, with a break below it exposing 0.6980, where buyers may opt to come back. Resistances, on the other hand, are at 0.7245, this week high, en route to 0.7300.

AUD/USD sentiment poll

The FXStreet Forecast Poll indicates that speculative interest is suspecting an interim top in the pair, as it is seen neutral in the shorter view, and bearish in the next weeks. Still, the average target in the three time-frame under study remains above the critical 0.70 threshold. At this point, the market sees no reason to return to the greenback, rather foreseeing some stability around the pair.

The Overview chart shows that while moving averages have decelerated, they still maintain their bullish slopes, a sign that bulls may have paused, but didn’t give up yet.

Related Forecasts:

EUR/USD Weekly Forecast: Corrective decline won’t grant further dollar gains

Bitcoin Weekly Forecast: BTC hit the pause button before a decisive breakthrough

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD eyes more weakness despite higher-than-expected monthly Retail Sales data

AUD/USD eyes more weakness despite higher-than-expected monthly Retail Sales data

The AUD/USD pair is expected to slip down to near 0.6400 despite the release of the lower-than-expected monthly Retail Sales data. The economic data has landed at 0.6%, higher than the estimates of 0.4%, but lower than the prior release of 1.3%.

AUD/USD News

EUR/USD renews 22-year low as yields propel DXY, focus on ECB vs. Fed drama, energy crisis

EUR/USD renews 22-year low as yields propel DXY, focus on ECB vs. Fed drama, energy crisis

EUR/USD takes offers to refresh multi-year low during seven-day downtrend. US Treasury yields rally to fresh cycle highs amid fears of economic slowdown, hawkish central banks. Energy crisis in Eurozone joins fears of more drama on the Russia-Ukraine issue to keep bears hopeful.

EUR/USD News

Gold turns sideways around $1,630 as investors await Fed Powell’s speech

Gold turns sideways around $1,630 as investors await Fed Powell’s speech

Gold price is displaying a dull performance as investors have sidelined ahead of the speech from Fed chair Jerome Powell. The precious metal is juggling around $1,630.00 after a modest decline from the critical hurdle of $1,640.00.

Gold News

Binance Coin price could shed more than 10% if this trend continues

Binance Coin price could shed more than 10% if this trend continues

Binance Coin price has been on a downtrend for quite some time and has intensified after the recent sell-off in Bitcoin price. Investors need to pay close attention to the BNB’s moves over the last three weeks, which revealed a bearish setup.

Read more

Lower gas prices and favorable views of labor market again boost confidence

Lower gas prices and favorable views of labor market again boost confidence

The Consumer Confidence Index rose to its highest level since April, and now sits more than 12 points higher than where it was just two months ago. Falling gasoline prices and a still-tight labor market are the main reasons we have seen a recent rebound in confidence.

Read more

Majors

Cryptocurrencies

Signatures