AUD/USD continues the tumble down, and now it reaches the really big test: the October 2011 low of 0.9388. The pair fell below 0.94 and reached 0.9393 in the wake of the new week, just 5 pips from this line. Will it break or bounce?
The reason for the fall is weak Chinese data: over the weekend, China released a big array of figures. Trade numbers were very worrying: exports grew by only 1% and exports shrank. This overshadowed the surplus.
In addition, inflation numbers came out worse than expected: the drop in PPI was deeper than thought, and consumer prices are now rising at a more moderate rate.
Other figures such as industrial production and retail sales came out more or less within expectations. See the live forex calendar for a deeper dive into the Chinese numbers.
As China is Australia’s No. 1 trade partner, the Aussie responded badly to signs of weak demand. AUD/USD opened the week at 0.9418 and fell down to 0.9393 before recovering.
It is important to note that Australian markets are closed today for the Queen’s birthday, and so is China, due to the Dragon’s Boat festival. We will get a better picture when Europe joins in.
Note that if the gap doesn’t close in the first 3-4 hours (i.e. during the Tokyo session), this is usually a sign that the gap is here to stay.
The Aussie is at fresh 20 month lows against the greenback. Below 0.9388, it is already a deeper low. Resistance is at 0.95.
For more lines and analysis, see the Aussie USD forecast.[do action=”tradingviews” pair=”AUDUSD” interval=”60″/]