AUD/USD got a boost from Chinese growth figures – ongoing Chinese growth means prosperity in Australia. The Aussie recovered from the risk aversive winds and is getting ready to move.
Chinese GDP showed an annual growth rate of 9.6% – not only is this far better than growth in any Western country, it even slightly exceeded expectations that stood on a 9.5% rate in Q3. It’s important to note that Q2 was even better – 10.3%.
China is Australia’s main trade partner – with high Chinese demand for Australian iron ore and coal, Australia avoided a recession. When the Chinese raised the rates, a step that would cool growth, the Aussie dropped, despite seeing high chances for a rate hike in Australia. The meeting minutes released by the RBA showed that the period of pauses in rate hikes will probably end soon, as the Australian economy is doing well. Australia’s interest rate is already at 4.50%, high above other Western countries.
Now, AUD/USD is trading back around 0.9850 – this is the previous historic high, set in 2008. It quickly recovered from the Chinese rate hike that sent it as low as 0.9660. Support is now found at 0.98, which worked as support also on Monday. Below, 0.9750 is an important line, followed by 0.9660, which proved to be a very important line by supporting the Aussie when it fell on the Chinese rate hike.
Two weeks ago, the weekly high was 0.9917 – this now serves as a minor resistance line on the road to parity. AUD/USD parity was reached very briefly last Friday. Will the Australian dollar make another attempt on parity with the US dollar?
The Currensee community thinks differently – an overwhelming majority of 68% favor short positions on AUD/USD at these highs, and only 32% are long. These are positions on real forex accounts. They probably see the currency as over-valued and overbought.
Where will it go?
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