AUD/USD maintains bearish trend on disappointing China data

  • 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 weakest level in almost a month

Global economic recovery suffers major blow on China woes

Commodity currencies across the board tumbled after China’s trade data signaled global economic 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 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 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 AUD/USD 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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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023.

His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.

Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with, where he provided market analysis on economic data and corporate news.

Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal.

Ed holds a BA in Economics from Rutgers University.