AUD/USD higher on strong Chinese data

The Australian dollar hasn’t missed a beat on Monday after posting gains on Friday. Early in North American trade, AUD/USD is trading at 0.7296, up 0.45% on the day.

China Industrial Production rises

One factor which is in the Australian dollar’s favor is the improving Chinese economy. China is Australia’s largest trading partner, which makes the Australian currency sensitive to key Chinese releases. On Monday, China Industrial Production posted a strong gain of 6.9% for a second straight month, the highest gain reported in 2020. In October, Manufacturing and Services PMIs accelerated further into expansion territory and beat the forecasts, another sign that China’s economy is on the right track. In fact, China could well be the locomotive which pulls the rest of the global train out of the economic doldrums in 2021.

RBA minutes next

The Reserve Bank of Australia releases the minutes of its November policy meeting on Tuesday (00:30 GMT). At the meeting, the central bank trimmed interest rates from 0.25% to 0.10%, a historic low. The RBA opted not to cut rates in October, as the policy meeting came out on the same day as the government’s budget release. At the November meeting, in addition to lowering interest rates, the RBA also introduced QE for the first time in its history, announcing the purchase of $100 billion of government bonds over the next six months. Bank members have floated the idea of negative rates, a drastic concept which the country’s commercial banks would no doubt oppose. Negative rates would likely weigh on the Aussie, as it would become a less attractive asset for investors. However, if economic conditions do not worsen, the RBA will shelve the negative rate scenario.

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AUD/USD Technical

  • AUD/USD broke above resistance at 0.7277 in the Asian session. The next resistance line is at 0.7332, followed by resistance at 0.7395.
  • We find support at 0.7214, followed by support at 0.7159
  • AUD/USD has flirted with the 10-day MA line on Friday but remains above this line.

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

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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