The Australian dollar came under pressure amid a list of new US tariffs against China. Will it continue falling? Chinese GDP and Australia’s jobs report are set to move the A$. Here are the highlights of the week and an updated technical analysis for AUD/USD.
The US prepared a tariffs list of around $200 billion worth of Chinese goods, weighing on markets. However, the two sides are ready to negotiate. The Australian dollar suffered on the risk-off atmosphere and then recovered.
AUD/USD daily graph with support and resistance lines on it. Click to enlarge:
- Chinese GDP: Monday, 2:00. The world’s second-largest economy grew at a steady pace of 6.8% annualized in Q1 2018, within the range set by the authorities. While many doubt the accuracy and integrity of the data that is published so early after the quarter ends, the publication has a significant impact. Any signs that trade is hurting the economy may send shockwaves all over the world. However, it may be too early to see such signs. A growth rate of 6.7% is on the cards for Q2 2018.
- Monetary Policy Meeting Minutes: Tuesday, 1:30. The Reserve Bank of Australia will release the meeting minutes from its latest rate decision in July, where it left rates unchanged at 1.50% once again. The RBA made very few changes to the statement, leaving room for more hints in the minutes. Any concerns about global trade may have an outsized impact on the Aussie.
- MI Leading Index: Wednesday, 00:30. The Melbourne Institute’s composite index showed a disappointing drop of 0.2% in the overall shape of the Australian economy last month. It could move back up this time. It is important to note that most of the figures used for this gauge are already public knowledge, so the impact may be muted.
- Australian jobs report: Thursday, 1:30. Australia reported a relatively disappointing increase in jobs back in May: 12K. A bigger gain is on the cards now: 16.6K. The unemployment rate is expected to remain unchanged at 5.4%. The publication will have the chance to move the Aussie on domestic affairs after swinging according to the global market moods.
- NAB Quarterly Business Confidence: Thursday, 1:30. The National Australia Bank’s highly regarded remained stable at 7 points in Q1 2018. The report for Q2 may be similar. The quarterly publication is more important than the monthly one.
*All times are GMT
AUD/USD Technical Analysis
Aussie/USD started off the week with a downfall, hitting 0.7360, just below the 0.7375 level mentioned last week. It then recovered and managed to close above 0.7400.
Technical lines from top to bottom:
0.7640 was a stubborn cushion in March and April. The fall below this line proved its strength. 0.7610 was the peak of an upwards move in late May.
0.7560 is the next level to watch after it was the recovery level in early May. 0.7520 was a swing low in late May.
0.7480 capped the pair in mid-July and defends the round 0.75 level. 0.7420 capped the pair twice in mid-July. 0.7360 was a low point in mid-July.
0.7310 is the low of July 2018. 0.7250 served as a pivotal line in early 2017 and the last line to watch is 0.7160 that was the swing low back then.
I remain bearish on AUD/USD
The Australian Dollar is a classic risk currency and it is hard to see any long-lasting rally in markets. There are better chances of a downfall.
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