HomeForex MarketAussie Greenback Stays on the Behest of China

Aussie Greenback Stays on the Behest of China

AUD/USD OUTLOOK

  • China continues to weigh negatively on the Aussie greenback.
  • Bearish IG shopper sentiment.

AUSTRALIAN DOLLAR FUNDAMENTAL BACKDROP

The Australian greenback appears to be like to claw again a few of its misplaced positive aspects in opposition to the U.S. greenback on Friday as threat urge for food appears to be on the rebound. After falling to contemporary yearly lows yesterday, the commodity forex doesn’t sit in a positive place going ahead primarily as a consequence of Chinese language progress forecasts. The ‘zero tolerance’ coverage by the Chinese language authorities in opposition to COVID-19 has severely impacted on commodity demand leaving the AUD uncovered to sustained draw back ought to the state of affairs stay.

The saving grace for the Aussie greenback lies with the extraordinarily tight labor market and rising inflationary pressures, permitting the Reserve Financial institution Australia (RBA) to motion an aggressive price path. Whereas the greenback stays favorable and we’re prone to see ‘purchase the dip’ circumstances, the Australian greenback is likely one of the solely international central banks that has the native financial backdrop to problem the hawkish Fed. Ought to Chinese language restrictions ease, I might not be shocked if we see the AUD lead the cost in opposition to the buck.

AUD/USD ECONOMIC CALENDAR

We finish the week off with U.S. shopper sentiment figures whereas we look ahead to subsequent week’s Australian jobs knowledge.

Supply: DailyFX financial calendar

AUD/USD TECHNICAL ANALYSIS

AUD/USD DAILY CHART

audusd daily chart

Chart ready by Warren Venketas, IG

Day by day AUD/USD worth motion exhibits bears trying to deal with the June 2020 swing low at 0.6777 however bullish divergence might point out short-term upside earlier than a resumption of the downtrend. Bullish divergence happens when costs drift decrease whereas the corresponding RSI readings push larger.

Key resistance ranges:

Key help ranges:

IG CLIENT SENTIMENT DATA: BEARISH

IGCS exhibits retail merchants are at present LONG on AUD/USD, with 75% of merchants at present holding lengthy positions (as of this writing). At DailyFX we sometimes take a contrarian view to crowd sentiment leading to a draw back bias.

Contact and comply with Warren on Twitter: @WVenketas

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