|

AUD/USD faces headwinds amid China’s economic woes, mixed Fed signals

  • China’s economic indicators signal distress, with weak retail sales, plunging imports/exports, and Evergrande’s bankruptcy filing.
  • US Federal Reserve minutes highlight commitment to 2% inflation target but voices caution against overtightening.
  • Traders eye upcoming S&P Global PMIs in Australia and a slew of US data, including Powell’s Jackson Hole speech, for directional cues.

AUD/USD registers minuscule losses though it registered weekly losses of 1.41%, as market sentiment remained downbeat amid China’s economic developments, denting investors’ mood. That, alongside global bond yields portraying traders expecting additional tightening, kept the Australian Dollar (AUD) pressured for the eighth consecutive day. The AUD/USD finished the week trading at 0.6401, down 0.02%.

Australian Dollar under pressure for the eighth day as China’s economic turmoil and global bond yields weigh on sentiment

During the last two weeks, China’s economic docket paints a troubled economic outlook, as retail sales were weaker than expected, imports and exports plunged, and business activity stalled. That, alongside news that Evergrande’s filing for bankruptcy in New York, added to the ongoing economic turmoil of the second-largest economy worldwide.

In the meantime, the latest US Federal Reserve monetary policy minutes, revealed on Wednesday, showed policymakers’ commitment to curb inflation towards its 2% target. In fact, most participants noted that further tightening is required, hurting investors’ speculations the central bank would give signs of pausing or ending its tightening cycle.

Nevertheless, it seems traders overreacted, as there have been growing voices among the Fed’s board to not overtightening monetary conditions. Regional Fed Presidents Bostic, Harker, Golsbee, and Barkin, stated that rates are restrictive, and the US central bank could be “patient” regarding future decisions. Consequently, the CME FedWatch Tool shows that market players expect the Fed to hold rates in September, but November’s meeting would be live.

AUD/USD traders’ focus shifts to next week’s data. In Australia, S&P Global PMIs are expected to remain unchanged. On the US front, Fed speakers, housing data, PMIs, durable goods orders, and Fed Chair Jerome Powell’s speech at Jackson Hole could rock the boat after volatility continued to shrink throughout August.

AUD/USD Price Analysis: Technical outlook

The AUD/USD downtrend remains intact, though it failed to achieve a daily close below the November 10 low of 0.6386, keeping buyers hopeful of higher prices. Despite that, AUD/USD could re-test 0.6400, followed by the new year-to-date (YTD) low challenge at 0.6364. A decisive break below the latter, expect the AUD/USD to visit the November 3 swing low of 0.6272, ahead of the 0.6200 figure. Otherwise, the AUD/USD could aim towards the May 31 low of 0.6458 before challenging the 0.6500 mark.

AUD/USD

Overview
Today last price0.6411
Today Daily Change0.0007
Today Daily Change %0.11
Today daily open0.6404
 
Trends
Daily SMA200.659
Daily SMA500.6682
Daily SMA1000.6672
Daily SMA2000.6736
 
Levels
Previous Daily High0.645
Previous Daily Low0.6364
Previous Weekly High0.6617
Previous Weekly Low0.6486
Previous Monthly High0.6895
Previous Monthly Low0.6599
Daily Fibonacci 38.2%0.6397
Daily Fibonacci 61.8%0.6418
Daily Pivot Point S10.6362
Daily Pivot Point S20.632
Daily Pivot Point S30.6276
Daily Pivot Point R10.6448
Daily Pivot Point R20.6492
Daily Pivot Point R30.6534

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

More from Christian Borjon Valencia
Share:

Editor's Picks

EUR/USD stays well offered below 1.1800

The selling pressure on EUR/USD is picking up pace, with the pair slipping decisively below the key 1.1800 level and sliding to fresh two week lows as Wednesday’s session draws to a close. The move lower comes as the US Dollar finds renewed strength after the latest round of US data and the release of the FOMC Minutes. Next of note on the docket will be the US weekly Initial Jobless Claims.
 

GBP/USD reaches multi-day lows near 1.3500

GBP/USD reverses its initial upside momentum and is now adding to previous declines, approaching the 1.3500 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.

Gold battle to regain $5,000 continues

Gold is back on the front foot on Wednesday, shaking off part of the early week softness and challenging two-day highs near the $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.

Bitcoin has found or is near a bottom, extended consolidation to follow: K33

Bitcoin (BTC) is nearing or has already established a bottom, which could be followed by a sustained period of slow price movement, according to K33.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Sui extends sideways action ahead of Grayscale’s GSUI ETF launch

Sui is extending its downtrend for the second consecutive day, trading at 0.95 at the time of writing on Wednesday. The Layer-1 token is down over 16% in February and approximately 34% from the start of the year, aligning with the overall bearish sentiment across the crypto market.