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Australian Dollar Soars as China Imports and Exports Jump in December

The price of crude oil rose slightly after European leaders triggered Iran nuclear deal’s dispute mechanism. This is in response to the latest hostilities between the United States and Iran. The Trump administration abandoned the deal in 2018 and reinstated tariffs. Iran has been asking the Europeans to intervene and fill the gap that was left by the US. The crisis escalated this year when the US shot and killed a major Iranian general. Iran responded by shooting missiles at a US base in Iraq and by announcing its withdrawal from the agreement. The decision by the EU to trigger the dispute mechanism may also see them joining the US in adding sanctions on the country. Iran’s economy shrank by more than 9% in 2019 while inflation has risen by more than 40%.

The Australian dollar rose today after China released positive trade numbers for December. The numbers from the trade office showed that exports rose by 7.6% in December. This was a significant increase from November’s decline of 1.3%. Economists polled by Reuters were expecting the exports to grow by 3.2%. Imports rose by 16.3% in December. This was the fastest growth rate since October 2018. It was also higher than the previous increase of 0.6%. These numbers are important for Australia because it ships two thirds of its goods to China. The numbers show evidence of the positive reaction to the announcement of the first phase of a trade deal with the United States.

US futures declined as traders geared for fourth quarter earnings data. The earnings started on a high note as JP Morgan announced revenue and earnings beat. The biggest US bank reported quarterly earnings of $2.57 a share and a profit of $8.52 billion. This was higher than an EPS of $1.98 and a profit of $7.07 billion a year ago. Revenue rose by 9% to $28.33 billion, which was higher than the analysts’ consensus of $27.87 billion. Meanwhile, CPI data from the Bureau of Economic Analysis showed that consumer prices increased moderately in December. Headline CPI rose by 2.3% after rising by an annualized rate of 2.1% in November. The CPI declined from 0.3% in November to 0.2% in December.

AUD/USD

The AUD/USD pair rose today in reaction to the positive trade data from China. The pair reached an intraday high of 1.0428, which is the highest level since January 7. The rise was also a continuation of a rally that was started on January 8, when it reached a low of 1.0315. The pair is above the short and medium-term moving averages while the signal and RVI lines are above the neutral level. The pair may continue to rise ahead of the signing of the first phase of the trade deal.

XBR/USD

The XBR/USD pair rose from an intraday low of 63.43 to a high of 64.30. The pair has been on a downward trend in the past few days as tensions in the Middle East eased. It has dropped from a high of 70.64. The current price is along the important support shown in white below. The 9-day and 20-day Adaptive Moving Average appear to be making a bullish crossover. However, this is happening in a low-volume environment as shown by the volume indicator below. This means that there is a possibility that the pair may resume the downward trend.

EUR/USD

The EUR/USD pair declined today after positive results from JP Morgan. The price reached a low of 1.1120 while the short and medium-term EMA appeared to make a bearish crossover. The pair struggled to move above the important resistance level shown in white below. The price is also along the 23.6% Fibonacci Retracement level. The pair may continue the overall decline that started on December 31.

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OctaFx Analyst Team

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