China could offer more pro-growth measures in its annual government meeting, long Aussie

Yuan’s rally means regional sentiment on risk assets will improve

With China rediscovering its appetite for stimulus, the Federal Reserve promising to be patient on rates and the optimism surrounding trade talks, Aussie dollar have a good reason to start shaking off February’s lethargy.

Investors looking for the next risk-on trigger will be watching China’s annual National People’s Congress starting Tuesday, as the country’s growth target is likely to signal how much the economy has been affected by the trade war. Friday’s US payrolls report will also be key, though it would only take a much higher-than-forecast reading to convince traders that Fed interest-rate increases this year are back in the cards.

Carry-trade returns from eight developing-nation currencies, funded by short positions in the dollar, snapped a three-month rally in February. This signal that a dollar revival could undermine bullish emerging-market bets. Mitigated risk could come from renewed criticism from US President Donald Trump of the Federal Reserve and comments over the weekend that the dollar was too strong.

China Premier Li Keqiang will outline 2019 goals for economic expansion at the National People’s Congress. We expect China to set a lower growth target of either about 6%, or from 6 to 6.5 %, down from around 6.5% for the past two years. All eyes in particular will be on Premier Li Keqiang’s government work report on Tuesday outlining 2019 goals for GDP growth, the fiscal balance, inflation, money supply and credit growth.

Meanwhile, US officials are preparing a final trade deal that President Trump and his Chinese counterpart Xi Jinping could sign in weeks, with Washington eyeing a summit between the two presidents as soon as mid-March. The yuan strengthened for a fourth month in February, its longest winning streak since January 2018.

The currency is approaching a key technical level against the dollar, a break of which is set to fuel further gains in the yuan. China’s currency has rallied five times and has definitively crossed the 50-week moving average since 2009. We believe yuan’s strength will also transfer its optimism into other currencies in the region including Aussie and Kiwi.

 

Our Picks

EUR/USD: This pair may rise towards 1.14 as Trump commented over the weekend that dollar is too strong at this moment.

EURUSD

AUD/USD: This pair may rise towards 0.7140 as China’s government meeting may boost China’s outlook, and this will benefit the Aussie.

AUDUSD

XAU/USD: This pair may rise towards 1305 this week

XAUUSD

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor.

Recommended Content


Recommended Content

Editors’ Picks

GBP/USD bulls retain control near 1.3300 mark, highest since March 2022

GBP/USD bulls retain control near 1.3300 mark, highest since March 2022

The GBP/USD pair trades with a positive bias for the third straight day on Friday and hovers around the 1.3300 mark during the Asian session, just below its highest level since March 2022 touched the previous day.

GBP/USD News
EUR/USD grapples with higher ground as Fed cuts weigh on Greenback

EUR/USD grapples with higher ground as Fed cuts weigh on Greenback

EUR/USD found the high end on Thursday, holding fast to the 1.1150 level, though most of the pair’s bullish momentum comes from a broad-market selloff in the Greenback rather than any particular bullish fix in the Euro.

EUR/USD News
Gold consolidates weekly gains, with sight on $2,600 and beyond

Gold consolidates weekly gains, with sight on $2,600 and beyond

Gold price is looking to build on the previous day’s rebound early Friday, consolidating weekly gains amid the overnight weakness in the US Dollar alongside the US Treasury bond yields. Traders now await the speeches from US Federal Reserve monetary policymakers for fresh hints on the central bank’s path forward on interest rates.

Gold News
Shiba Inu is poised for a rally as price action and on-chain metrics signal bullish momentum

Shiba Inu is poised for a rally as price action and on-chain metrics signal bullish momentum

Shiba Inu remains strong on Friday after breaking above a symmetrical triangle pattern on Thursday. This breakout signals bullish momentum, further bolstered by a rise in daily new transactions that suggests a potential rally in the coming days.

Read more
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures