AUDUSD peaked above 0.7800 early on in the Asia session on the back of widespread USD weakness, but the pair soon dirtied back below this key resistance zone. It spent the rest of the session in no man’s land between 0.7800 and some fresh support around 0.7765. A lack of headline moving events or data releases in Asia has keep both bear and bulls on the sidelines. In fact, it’s expected to be a relatively quiet night as well, as least on the data front; everyone will be waiting for the results of a meeting between Greek PM Tsipras and Merkel in Berlin.
There isn’t much happening in Australia this week which could influence the direction of the Australian dollar, apart from a speech by RBA assistant governor Edey tomorrow and the RBA’s Financial Stability Review on Wednesday, but we are expecting some important China economic data. HSBC releases its preliminary manufacturing PMI for March, which is expected to print around 50.5 (prior 50.7). The Conference Board China Leading Economic Index is also due tomorrow.
There are reports from China Business New that Q1 GDP growth is expected to be 6.85% y/y (the official figures are due on April 15) which is lower than the market may be comfortable with. Any more indications that China’s economy may be growing slower than expected, despite Beijing’s attempts to boost growth, could be bad for the commodity-backed Australian dollar.
On the other side of the AUDUSD equation, there’s a lot happening in the US, as always. There are nine Fed speakers this week and numerous important data releases, including all-important CPI and final GDP numbers. A lack of real inflationary pressures in the US economy is pushing back expectations for the higher rates, but we are expecting to see a 0.2% increase in February; core-CPI is only expected to rise at a mildly disheartening pace of 0.1%.
Shaky techs
From a technical perspective, AUDUSD is looking a little shaky in the short-term. The chart below highlights some bearish divergence in price, which suggests that the pair may struggle to break through 0.7800, thus our bias is lower below this level. After 0.7765, there’s isn’t much support before price hits 0.7700. In the event that price breaks 0.7800 and holds, we will be watching 0.7850.
Source: FOREX.com
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