AUD/USD: China's record low investment growth could cap upside in the AUD

  • China Aug investment growth falls to new record low, industrial output, retail sales up
  • The dismal investment growth could put brakes on the AUD/USD rally, set in motion by the renewed hopes of the US-China trade talks.   

The AUD/USD pair is on the defensive, courtesy of the bearish divergence of the hourly chart relative strength index (RSI) and may suffer a temporary intraday pullback, courtesy of China's record low investment growth.

At press time, the pair is trading largely unchanged on the day at 0.7187. 

The data released a few minutes ago showed fixed-asset investment growth slowed to a record low of 5.3 percent in the first eight months of the year, missing the estimate of 5.5 percent.

However, industrial output grew 6.1 percent in August from a year earlier, and retail sales rose 9.0 percent, both beating expectations.

The drop in the fixed-asset investment could accentuate the impact of the bearish RSI divergence on the hourly chart, although the dip will likely be short-lived as the uptick in retail sales (or consumption) indicates that domestic demand is cushioning China's economy against the external shocks.

Further, the renewed hopes of the US-China trade talks are likely to keep risk assets well bid.

AUD/USD Technical Levels

Resistance: 0.72 (psychological level), 0.7229 (previous day's high), 0.7256 (61.8% Fib R of 0.7362/0.7085)

Support: 0.7159 (200-hour MA), 0.7144 (Sep. 5 low), 0.7085 (weekly low)

  TREND INDEX OB/OS INDEX VOLATILY INDEX
15M Strongly Bearish Neutral High
1H Bearish Neutral Low
4H Bullish Neutral High
1D Bullish Neutral Expanding
1W Bearish Oversold High

 

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