- Aussie traders gave little importance to the RBA’s report with nearly 10 pips of loss on worries concerning the domestic housing market.
- China data will be in the focus for now.
AUD/USD is trading near 0.7130 after the release of RBA’s financial stability review. The central bank cited the housing market as a risk to the domestic economy while signaling a slower pace of global growth.
Brighter chances of the trade deal between the US and China, coupled with the overall weakness of the USD, boosted the Aussie during early-week. However, the recent improvement in the US data and sluggish outcomes from Australia and China dragged the pair back from a descending trend-line ranged since December. Investors may now focus on China’s trade balance data for further direction.
In its bi-annual financial stability review report, the Reserve Bank of Australia (RBA) said that growth forecasts were revised down and there are risks of a sharper downturn. The report further said that the central bank Sees vulnerabilities in key trading partners, the global financial system.
Buyers were pleased during the initial week as optimism surrounding the trade deal between the US and China joined overall pullback in the US Dollar (USD) and China’s readiness to infuse more funds into the economy.
However, the Aussie couldn’t clear a downward sloping trend-line ranged since December on Thursday as early-day positive news concerning the US-China trade talks couldn’t win over soft China inflation numbers. Adding to the pair’s weakness were better than forecast PPI and 50-year low initial jobless claims from the US.
Having witnessed the market response to the RBA’s bi-annual financial stability review, investors may now turn towards China’s trade balance, up somewhere near 03:00 GMT for further direction.
Forecasts suggest headline trade balance number to increase to $7.05 billion from $4.05 billion with important (YoY) likely dropping to -9.6% from -0.3% and exports (YoY) expected to recover from -20.8% slump to +7.3% rise.
AUD/USD Technical Analysis
0.7105-0.7100 area, comprising 50-day simple moving average (SMA) can serve as immediate support ahead of an ascending trend-line from March 08, 0.7070, a break of which could shift bears’ attention to 0.7030 and 0.7000 supports.
On the upside, 0.7150 and more than four-month-old descending trend-line at 0.7170, followed by 200-day SMA level of 0.7200 could challenge buyers.
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