AUD/USD – Australian dollar resumes downturn after soft Chinese numbers

AUD/USD has returned to its losing ways in the Wednesday session. Currently, the pair is trading at 0.6917, down 0.40% on the day. On the fundamentals front, Australian Wage Price Index remained pegged at 0.5%, shy of the estimate of 0.6%. In the U.S., the markets are braced for soft consumer spending numbers. Retail sales is projected slow to 0.2%, down from 1.6% in the previous release. Core retail sales is projected to drop to 0.7%, compared to 1.2% in March. Thursday will be busy, as the U.S. posts building permits, unemployment claims and the Philly Fed Manufacturing Index.

It’s been a rough week for the Australian dollar, which has slipped 1.2% and continues to set new lows in 2019. The currency sagged on Monday after the U.S. slapped new tariffs on some $200 billion in Chinese goods, with China quickly retaliating with tariffs on $60 billion in U.S. products. There was more bad news out of China on Wednesday, as industrial production and retail sales missed expectations. Industrial production fell to 5.4% in April, well short of the estimate of 6.5%. This reading dropped from 8.5% a month earlier. Retail sales also slipped to 7.2%, down from 8.7% in March. This was much lower than the forecast of 8.6%. The Aussie is sensitive to Chinese data, as China is Australia’s number one trading partner. AUD/USD has posted four straight losing weeks and the pair remains under strong pressure this week.

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AUD/USD Fundamentals

Tuesday (May 14)

  • 20:30 Australian Westpac Consumer Sentiment. Actual 0.6%
  • 21:30 Australian Wage Price Index. Estimate 0.6%
  • 22:00 Chinese Industrial Production. Estimate 6.5%. Actual 5.4%
  • 22:00 Chinese Retail Sales. Estimate 8.6%. Actual 7.2%

Wednesday (May 15)

  • 8:30 US Core Retail Sales. Estimate 0.7%
  • 8:30 US Retail Sales. Estimate 0.2%
  • 8:30 US Empire State Manufacturing Index. Estimate 8.2
  • 9:15 US Capacity Utilization Rate. Estimate 78.7%
  • 9:15 US Industrial Production. Estimate 0.0%
  • 9:30 US FOMC Member Quarles Speaks
  • 10:00 US Business Inventories. Estimate 0.0%
  • 10:00 US NAHB Housing Market Index. Estimate 64
  • 10:30 US Crude Oil Inventories. Estimate 0.0M
  • 16:00 US TIC Long-Term Purchases. Estimate 36.3B

Thursday (May 16)

  • 8:30 US Building Permits. Estimate 1.29M
  • 8:30 US Unemployment Claims. Estimate 220K
  • 8:30 US Philly Fed Manufacturing Index. Estimate 10.0
  • 8:30 US Housing Starts. Estimate 1.21M

*All release times are DST

* Key events are in bold

AUD/USD for Wednesday, May 15, 2019

Open: 0.6944 High: 0.6948 Low: 0.6915 Close: 0.6917

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.67686 0.6744 0.6825 0.6968 0.7085 0.7190

AUD/USD has edged lower in the Asian and European sessions

  • 0.6825 is providing support
  • 0.6968 is the next resistance line
  • Current range: 0.6825 to 0.6968

Further levels in both directions:

  • Below: 0.6825, 0.6744 and 0.6686
  • Above: 0.6968, 0.7085, 0.7190 and 0.7240

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.