Australian Dollar Eyes China Q4 GDP Data as APAC Trading Kicks Off

Australian Dollar, AUD/USD, China Q4 GDP, Technical Outlook – Talking Points

• Australian Dollar in focus as China’s Q4 GDP growth rate data readies to cross the wires
• Asia-Pacific markets face a busy week ahead, with BoJ and Australian Jobs report due out
• AUD/USD eyes confluent area of resistance as prices start APAC trading slightly higher

Monday’s Asia-Pacific Outlook

AUD/USD is in focus at the start of the Asia-Pacific trading week, with China’s fourth-quarter gross domestic product (GDP) data set to cross the wires. Analysts expect growth to slow to 3.6% in Q4 on a year-over-year basis, according to a Bloomberg survey. That would be the slowest rate of growth in 18 months. The Australian Dollar may react to the data print given Australia’s economic link to China.

The lackluster rate of growth for the world’s second-largest economy is likely attributable to China’s embattled property sector and widespread Covid-19 lockdowns through the October to December period. Chinese policymakers initially tightened rules on lending earlier this year in response to the Evergrande crisis. But now, policymakers are expected to loosen policy to stimulate growth, which is in stark contrast to other economies around the world that are beginning to tighten policy. A cut to the one-year loan prime rate (LPR) may come as soon as this week.

China will also report December retail sales, industrial production and fixed asset investment figured, all of which are expected to ease from the prior month. However, AUD/USD may react to the upside if the data set shows a better-than-expected picture as a whole. Later today, Indonesia’s December trade balance and Japan’s tertiary industry index (Nov) will cross the wires.

The week ahead will also be fairly busy, with the DailyFX Economic Calendar showing several potentially high-impact events set for release. The Bank of Japan will report an interest rate decision on Tuesday, although rates are largely seen staying negative. The BoJ may, however, opt to change the language around its inflation target. Later in the week, Australia’s December jobs report will cross the wires, followed by a PMI report for January later in the week. Japan’s December CPI data is due out Thursday.

AUD/USD Technical Forecast

AUD/USD bulls managed to gain ground last week, but strength was trimmed going into the weekend after a major confliction area ranging back to July capped a move higher. The falling 100-day Simple Moving Average (SMA) offered confluent resistance. Currently, prices are slightly higher in early APAC trading, just above the 38.2% Fibonacci retracement level from the October/December move. A drop lower faces potential support from the September swing low zone.

AUD/USD Daily Chart

Chart created with TradingView

--- Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the comments section below or @FxWestwater on Twitter