AUDUSD
The AUDUSD pair is up by more than 0.50% today as the market react to the strong economic data from China. The pair, which is in its third day of straight gains is trading at 0.7325.
The main catalyst for the strong AUDUSD performance today is a statement by the Chinese bureau of statistics. The report showed that the Chinese economy continued to rebound in August. The retail sales rose by 0.5% during the month, turning positive for the first month this year. This data was better than the previous month’s decline of 1.1% and the 0.1% increase that analysts were expecting.
Separately, another data showed that industrial production rose by 5.6% in August after rising by 4.8% in the previous month. Analysts were expecting the data to show that the production rose by 5.1%. In the same month, fixed asset investments fell by 0.3%, which was worse than the 0.4% decline in the previous month.
The Chinese employment sector continued being robust as well. The unemployment rate declined to 5.6% from the previous 5.7%. This number is significantly better than in most countries, including the US, where the rate is at 8.4%.
The AUDUSD reacted to these numbers because of the close relationship between the Australian and Chinese economies. For one, Australia sells more than a third of its exports to China. Therefore, Australia’s economy tends to benefit when China releases positive data. Indeed, the Chinese growth was the main reason why the Australian economy had not had a recession in more than three decades before the virus.
The Australian dollar was not the only currency to gain on the news. In China, the Chinese yuan climbed to the highest level since May last year against the dollar.
The AUDUSD is trading at 0.7325, which is the highest it has been since last week. The daily chart shows that the price is above the ascending trendline that is shown in black. This line connects the lowest levels in June, July, August, and September. It is also above the 50-day and 25-day exponential moving averages.
Therefore, after failing to move below the support, I suspect that bulls will remain in charge as they attempt to test the resistance level at 0.7400. This price is both an important psychological level that is also the 1st September high. On the flip side, a move below the ascending support will invalidate this trend.
