- AUD/USD fails to enjoy China’s upbeat data amid RBA’s dovish statement.
- The US-China tension also weighs on the Aussie pair.
AUD/USD remains soft while taking rounds to 0.6800 after the release of RBA’s quarterly monetary policy statement and China’s monthly inflation data during early Friday.
Reserve Bank of Australia’s (RBA) quarterly monetary policy statement showed the Aussie central bank’s readiness towards further easy policies while mentioning downside risks to the economy. The central bank also lowered its inflation and growth forecasts for Gross Domestic Product (GDP) and Inflation.
China’s July month inflation data flashed upbeat sigs as the headline Consumer Price Index (CPI) rose past 0.2% and 2.7% forecasts to 0.4% and 2.8% figures on MoM and YoY basis respectively. On the other hand, Producer Price Index (PPI) shrank more than -0.1% forecast to -0.3% on a yearly format.
Having recovered during Thursday, commodity-linked currencies, like the Australian Dollar (AUD), didn’t have a good start on Friday as headlines from the US signaled an escalation of tension between the world’s largest economies.
However, the Aussie started recovering and surged to the intra-day high after the RBA Governor Philip Lowe began his testimony in front of the House of Representatives’ Standing Committee on Economics.
Noting from his comments, it seems that the RBA holds bearish bias intact and stands ready to use unconventional measures. Though, support Aussie weakness due to the economy’s export-oriented nature.
While the Governor’s Testimony can keep rolling intermediate statements, investors may now concentrate on trade/political headlines concerning the US and China for fresh impulse.
Technical Analysis
Buyers are waiting for a sustained break beyond 0.6831, comprising June low, in order to aim for 21-day exponential moving average (EMA) level of 0.6873. On the contrary, the downside is limited by 0.6750/45 area, a break of which can push bears towards 0.6700 and monthly low near 0.6677.
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