AUD/USD Maintains Bearish Trend on Disappointing China Data
2023.08.08 10:31
- China’s exports post worst plunge since February 2020
- China’s imports from Australia fell 10.9% y/y, which was a major reversal from the 6.2% gain seen last month
- Also adding pressure on AUD was PBOC fixing, which sent the yuan to its weakest level in almost a month
Global economic recovery suffers major blow on China woes
Commodity currencies across the board after China’s trade data signaled global economy is in trouble over the short-term. A steadily improving Chinese economic recovery has not occurred as the domestic economy remains very weak. This economic report posted some of the weakest data points since early in the pandemic.
The Australian dollar is maintaining a clear bearish trajectory that has been in place over the past two weeks, since the double-top pattern formed around the 0.6895 level. Supporting this bearish technical bias are the downward-sloping trendlines that continue to be respected since the early last decade. The fundamentals were supposed to be turning around now but that won’t happen as the world’s second-largest economy struggles to gain any momentum. Adding to China’s woes is the struggling property sector, which should keep the pressure to deliver more stimulus. Banking sector fears are back again and if Country Garden, the biggest privately owned developer in China goes down, that could trigger a crisis in confidence for the property sector.
In the event that sees further downside that breaks below the 0.6450 level, a continuation of the downward trend could initially target 0.6402, with key residing at the 0.6370 level. If risk appetite stabilizes and the Australian currency rebounds, major resistance resides at the 0.6700 level.
The New Zealand dollar also tumbled, down 0.90%, while the Canadian dollar weakened by 0.56%.
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