Search ForexCrunch
  • AUD/USD dropped 20 pips to near 0.7000 after China’s trade balance data on early Friday.
  • The US employment data and developments at the trade talks between the US and China are next up in the Aussie traders’ radar.

AUD/USD dropped to near 0.7007 after China’s February month trade balance figures disappointed Aussie buyers. China’s exports slide -16.6% YoY from +13.9% prior whereas imports weaken to -0.3% against +2.9% prior. Trade Balance figure was at $4.12 billion against $39.16 billion prior. Trade balance in terms of Yuan was 34.46 billion in February versus 271.16 billion in January.

The AUD/USD pair has been on a downturn since late-February as disappointing statistics and a downward revision to 2019 economic growth from Australia’s largest customer, China, joined hands with pale data at home. As a result, the RBA Governor moved further in his latest bearish bias and triggered market expectations that the Reserve Bank of Australia (RBA) is on a way to rate-cut after holding benchmark cash rate unchanged for nearly three years.

Having received mixed signals from today’s China data, investors now look forward to the February month US employment stats to foresee near-term moves. Forecasts suggest a soft print of headline nonfarm payrolls of 180K from 304K while unemployment rate can weaken to 3.9% from 4.0%. Further, average hourly earnings (YoY) may increase a bit to 3.3% from 3.2% earlier.

Other than the US data, developments surrounding the US-China trade developments should also be noted carefully. As per latest news from Bloomberg, the US President Donald Trump is pushing his team to reach a deal with China but the dragon nation doubts last-minute surprises when Trump meets his Chinese counterpart Xi Jinping around mid-March.

Given the overall upbeat expectations from the US headline employment and optimism surrounding US-China trade deal, Aussie may remain volatile and tilt downwards mainly due to economic weakness at China and Australia.

AUD/USD Technical Analysis

As per FXStreet analyst Ross J Burland, the pair rests at critical support and a break of 0.6980 can drag the AUD/USD pair towards 0.6802.

“The 4HR Cloud is bearish with price developing below cloud resistance and Tenken-Sen leading the way. A break of 0.6980 opens the flood gates to 0.68 the figure. On the flip side, a break above 0.7050 will start to negate the descending channel’s dominance, clearing out stale shorts and caution should be applied.”