We Continue to Sell AUD/USD As Chinese Economy Keeps Softening
AUD/USD has been declining since it made a bearish reversal by the middle of last month and it has retreated almost 500 pips lower after falling to 0.6420s earlier today. We have been opening sell AUD/USD signals during retraces higher, as sellers remain in charge.
This pair continues to make lower highs, which is a strong bearish signal and moving averages are acting as resistance on the H1 chart, providing good selling opportunities. There are several reasons for the downward momentum in this pair, the first being lower inflation in Australia, with the Reserve Bank of Australia turning neutral now and refraining from raising rates in the last two meetings.
The RBA kept its cash rate unchanged with a slight tweak to a line in the policy statement that suggests that they are leaning more on the dovish side. The data has been mixed as the Australian Jobs report surprised again to the upside but the Inflation report and the Wages data missed expectations. Nonetheless, they will see more data before the next meeting and can make a better-informed decision.
The US Dollar has also appreciated across the board as the attention may have turned already to the next data given the higher energy prices and better retail sales figures, which shows that the US consumer is in good shape. On top of this, China’s economy showing more weakness instead of getting stronger.
China July Data
- China July Industrial production YoY +3.7% v 4.5% expected
- June industrial production was 4.4%
- Retail sales YoY for July 2.5% vs 4.8% expected
- June retail sales were 4.1%
- Fixed asset investment YtD 3.4% vs 3.8% expected
- Prior fixed asset investment was 3.8%
AUD/USD Live Chart
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