Morning report: Australian dollar relief hinges on China GDP report
Australian dollar gyrates vs US dollar after inflation report; China’s second-quarter GDP growth rate set to cross the wires and AUD/USD outlook still bearish after prices test wedge support.
Source: Bloomberg
Friday’s Asia-Pacific outlook
AUD/USD is little changed after swinging between gains and losses over the past 24 hours. The US dollar strengthened after a government report showed an 11.3% y/y rise in US wholesale prices, which firmed up Federal Reserve rate hike bets. Those stronger bets eased earlier this morning when Fed Governor Christopher Waller appeared to throw his support behind a 75 basis-point hike. The Dow Jones Industrial Average (DJIA) fell 0.46% at the close.
Crude oil prices fell more than 4% before trimming losses. WTI crude oil is nearing a 10% loss for the month as demand shows signs of cooling. Data from the US Energy Information Administration (EIA) revealed a sharp drop in gasoline demand for the week ending July 08. That is reflected in the 1:1 oil/gasoline crack spread, a proxy for refiner margins.
Iron ore prices are down in early trading, presenting a headwind for the Australian dollar. However, China may lift its ban on Australian coal. Chinese policymakers worry that increased competition amid Russian sanctions will make coal harder to source. Australia stands to benefit from higher export revenues if the two-year ban is lifted. Newcastle coal futures traded at $430 a tonne, just below its record high set back in March.
China’s second-quarter gross domestic product (GDP) growth rate is slated to cross the wires today. Analysts expect the Q2 figure to show a 1.0% y/y increase, which would be down from 4.8% y/y in Q1. The lockdowns in Shanghai and other cities from April to June likely weighed on economic activity. Meanwhile, China’s property sector continues to struggle as developers miss interest payments. Moreover, reports of protests over mortgage payments are surfacing, which may draw a response from Beijing. China Merchants Bank, a firm with heavy mortgage debt exposure, fell 3.75% in Shanghai on Thursday.
Notable events for July 15:
- China – House Price Index YoY (June)
- Japan – 3-Month Bill Auction
- Australia – HIA New Home Sales MoM (June)
- Hong Kong – Business Confidence (Q3)
AUD/USD technical outlook
AUD/USD tested wedge support overnight but has since trimmed losses and is currently little changed over the last 24 hours. Bulls would need to pierce above wedge resistance to break the current downtrend. The RSI and MACD oscillators began tracking higher toward their respective midpoints on the eight-hour timeframe. Overall, however, the case for a trend reversal looks rather weak.
AUD/USD four-hour chart
Source: TradingView
This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
0 Comments
Recommended Comments
There are no comments to display.
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now