TALKING POINTS – AUD/USD, TRADE BALANCE, TRADE WARS, EQUITIES
- AUD/USD rallied following the release of outperforming trade balance data
- Dominant downtrend remains intact as 2015 support levels may turn into resistance
- Risk aversion, US employment data, and RBA November meeting in focus next
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The Australian Dollar strengthened against its US namesake after local trade balance data crossed the wires early into Thursday’s Asia Pacific trading session. September’s trade balance clocked in at A$3017m, beating both economists’ forecasts of A$1700m and August’s A$1604m. The third quarter’s export price index similarly outperformed at 3.7%, compared to the estimate of 2.2% and the 1.9% previous. Meanwhile, the 3Q import price index was 1.9%, with expected 1.0% and 2Q’s 3.2%. The uptick in trade figures may continue, as President Trump recently alluded to a “great deal” with China on trade that caused the Aussie to briefly soar.
AUD/USD Chart (5-minute)
Chart prepared in TradingView
Looking past the jump in prices, AUD/USD has remained in a dominant downtrend channel for the majority of this year due to interest rate differentials and global risk aversion. The currency pair recently carved a new 2018 low of 0.7021 and is now facing resistance at levels that formerly served as support. An invalidation of the descending trend line and reversal of these levels back to support may indicate a bearish reversal to come.
AUD/USD Chart (Daily)
Looking ahead, the sentiment-linked unit will continue to closely eye risk trends. Continued broad-based market aversion and losses in global equities may mean further losses in the long-run for the Aussie. In addition, AUD/USD will also be closely eyeing the releases of US employment and manufacturing data, as well as the Reserve Bank of Australia’s cash rate target at their November 6th meeting.
AUD/USD TRADING RESOURCES
- Join a free Q&A webinar and have your trading questions answered
- Just getting started? See our beginners’ guide for FX traders
- Having trouble with your strategy? Here’s the #1 mistake that traders make
- See how the Australian Dollar is viewed by the trading community at the DailyFX Sentiment Page
--- Written by Megha Torpunuri, DailyFX Research Team
