The highly anticipated roster of economic reports from China provided little surprise to market participants in today’s Asian session. According to the National Bureau of Statistics of China, the economy grew by 6.0% in the last quarter of 2019. This reading matched the forecast and the third-quarter China GDP, which were also at 6.0%. We saw some volatility on AUDUSD around the release. The currency pair initially fell to 0.6883 ahead of the numbers and spiked up to 0.6903 when the report came out. As of this writing, AUDUSD has steadied just below the 0.6900 handle.
While China GDP came in as expected, the reading translates to a 6.1% economic growth for 2019, which is the lowest yearly reading the country has clocked in since 1990. The report is a testament that the ongoing trade war has weighed down Chinese growth which churned double-digit growth figures in the 2000s. There is a general sense of hope among investors that the US-China Phase One Deal could soon contribute to higher GDP figures.
AUDUSD is sensitive to economic data out of China because it is Australia’s major trading partner. It is widely thought that if China GDP is doing well, it’s only a matter of time until Australia’s numbers reflect positive growth too.
Alongside the GDP report, fixed asset investment ending on December 31, 2019, came in higher than expected at 5.4%. The forecast was only for a 5.2% uptick. Industrial production also topped the 5.9% forecast when it printed at 6.9%. The annualized retail sales figure was also slightly better at 8.0% versus the 7.9% consensus.
On the other hand, the country’s unemployment rate climbed higher to 5.2% for December from 5.1% in November.
Read our Best Trading Ideas for 2020.
On the hourly time frame, we can see that AUDUSD is testing support at the rising trend line from connecting the lows of January 9, January 15, and January 16. This area, just below the 0.6900 handle, also coincides with the 200 SMA.
Looking at the 4-hour chart, the 200 SMA also falls at the same price and is supporting AUDUSD. Reversal candles at the 0.6900 handle could mean that the China GDP may have attracted enough bids for AUDUSD to bounce off support at the psychological handle. We could soon see the currency pair trade to its near-term resistance at 0.6930. On the other hand, if a bearish candlestick closes below the 200 SMA, AUDUSD may drop to its January 9 lows at 0.6850.