- China’s top leaders committed to providing increased policy support for their struggling economy.
- China experienced sluggish growth in Q2 due to weakened demand.
- Investors are expecting a 25bps Fed rate hike this week.
Today’s AUD/USD outlook is bullish. On Tuesday, the Australian dollar strengthened as China’s top leaders committed to providing increased policy support for their struggling economy. This pledge comes after a challenging post-COVID recovery. Moreover, it will focus on bolstering domestic demand and indicating the likelihood of further stimulus measures.
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Notably, the world’s second-largest economy experienced sluggish growth in the second quarter due to domestically and internationally weakened demand. Consequently, policymakers face mounting pressure to implement additional stimulus.
As per the state news agency Xinhua, Politburo stated that the country would enhance economic policy adjustments. Furthermore, the emphasis would be on expanding domestic demand, boosting confidence, and mitigating risks.
Analysts have observed that China is on course to achieve its modest 2023 growth target of approximately 5%. However, there remains a possibility of missing the annual goal for the second consecutive year.
Despite the potential risk of falling short of the target, most analysts believe policymakers will refrain from implementing aggressive stimulus measures. This cautious approach is driven by concerns about the escalating risks associated with mounting debt levels.
Elsewhere, investors expect a 25bps Fed hike. Most economists polled by Reuters believe it will signify the end of the central bank’s tightening cycle. Additionally, market watchers are keenly interested in the Fed’s statement and press conference. Considering the incoming data indicating stronger-than-expected activity in June and July, these will provide insights into the Fed’s perspective on the robust US economy.
AUD/USD key events today
Investors will focus on the CB consumer confidence report from the US. Analysts expect this value to rise from the previous 109.7 to 111.8.
AUD/USD technical outlook: Buyers attempt a takeover.
On the charts, AUD/USD has risen from the 0.6725 support level and is on the brink of crossing the 30-SMA resistance. Similarly, the RSI has crossed above 50, indicating a shift in sentiment to bullish. This could be the beginning of a bullish takeover.
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However, bulls must also break above the 0.6800 resistance level to confirm their control. Otherwise, we could see the price fall to retest the 0.6725 support and continue the downtrend.
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Saqib Iqbal
