AUD/USD Struggles at 20-day SMA Despite Record China Trade Surplus

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Australian Dollar, AUD/USD, China, Trade Balance, Technical Outlook- TALKING POINTS

  • Asia-Pacific market sentiment lags regardless of rosy financial information out of China
  • China’s metropolis of Yiwu sees partial lockdown after Covid instances recognized
  • AUD/USD struggles to take care of itself above the 20-day Simple Moving Average

Monday’s Asia-Pacific Outlook

Better-than-expected Chinese trade information, pushed by robust export progress, might present some gasoline for markets to climb increased in right this moment’s Asia-Pacific session. China posted a $101.26 billion surplus for July, beating the $90 billion consensus forecast. An 18% rise in exports—seen as a proxy for international financial demand—helped drive China’s surplus to a document determine. However, imports rose at a 2.3% year-over-year tempo, disappointing analysts’ expectations of a 3.7% y/y improve and signaling that China’s home consumption stays mushy.

The Australian Dollar is buying and selling barely decrease versus the US Dollar this morning regardless of the rosy financial information. AUD/USD fell over 1% final week because the Greenback climbed into the weekend after a red-hot US nonfarm payrolls report that confirmed over half one million jobs added in July, dragging the unemployment fee down to three.5% from 3.6%. The still-strong labor market weakened the market’s “Fed pivot” thesis, evidenced by in a single day index swaps that confirmed 2023Fed fee hike bets firming.

China’s metropolis of Yiwu, positioned in Zhejiang Province, introduced a partial lockdown after a number of constructive Covid instances have been recognized. The key manufacturing hub has seen entry to and from the town restricted, in addition to the closure of gyms and eating places, although factories stay open. That might change nonetheless, if instances proceed to climb. China’s “Zero-Covid” technique stays very important to broader market sentiment.The longer it stays in impact, the extra inner injury it dangers inflicting on the world’s second-largest financial system.

Meanwhile within the United States, lawmakers handed a key a part of President Joe Biden’s agenda, doubtless marking the final main piece of laws earlier than US midterm elections begin later this 12 months.The vote threatens the Democrats majority in Congress. The invoice focuses on environmental coverage and contains practically half a billion {dollars} in spending for vitality and local weather-related measures. It additionally removes a tax credit score restrict on electrical autos (if they’re in-built North America), which ought to present a lift for American-based EV corporations. More broadly, the measure might be a tailwind for metals which can be closely utilized in EVs, reminiscent of copper, cobalt, and lithium.

Notable Events for August 08:

Philippines – Retail Price Index YoY (April)

Indonesia – Consumer Confidence (July)

New Zealand – Business Inflation Expectations (Q3)

Japan – Eco Watchers Survey (July)

Taiwan – Balance of Trade (July)

AUD/USD Technical Outlook

AUD/USD costs are holding above the 20-day Simple Moving Average following a number of intraday makes an attempt to interrupt beneath the important thing MA. If bears achieve piercing decrease, costs might return to round 0.6700, the place a Falling Wedge breakout began final month. The Relative Strength Index (RSI) reduce beneath its midpoint just lately, a bearish momentum sign.

AUD/USD Daily Chart

Chart created with TradingView

— Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the feedback part beneath or @FxWestwater on Twitter





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