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AUD Analysis and Talking Points

  • Chinese Proxy AUD Rises on US-China Trade Optimism
  • Patient Fed Keeps AUD Afloat
  • Australian Retail Sales Surprises to Upside

DailyFX Q1 2019 Trading Forecasts for AUD

Chinese Proxy AUD Rises on US-China Trade Optimism

The Australian Dollar has continued its rise against the greenback amid the support from a rise in the Yuan, which is trading at its strongest level since July. Of note, the Yuan has seen a 2% rise against the Dollar in the past two weeks, which may be a telling sign over the progress being made in trade talks. Overnight, Treasury Secretary Mnuchin stated that it is most likely that Chinese Vice Premier Liu will most likely visit the US in January for trade talks. As such, AUDUSD is above 0.72 for the first time in 3-weeks, however, resistance is situated at the high 0.72s.

Patient Fed Keeps AUD Afloat

The Aussie had been delivered a further boost after another round of dovish commentary from Fed’s Powell and Clarida. Most notably Clarida stated that the central bank can be patient in assessing how to adjust US policy as data evolves in 2019, adding that they will not hesitate to make changes to strategy of shedding assets. This was much the same rhetoric that Powell had provided. Consequently, the continued unwind of Fed-induced strength could see the AUD keep firm against the USD.

Australian Retail Sales Surprises to Upside

Latest Australian retail sales data printed above analyst estimates at 0.4% (Exp. 0.3%), suggesting that consumers have not been put off by the drop in house prices. That said, positive consumer spending signals may see Q4 GDP on a firmer footing.

AUDUSD Price Chart: Daily Time Frame (Feb 2018 – Jan 2019)

AUDUSD Rises on Fed Doves and Trade War Optimism, However, Downtrend Remains Intact

Despite the push higher in the Australian Dollar, the currency is stuck within the downtrend that has been in place since the beginning of the 2018. Eyes are on key resistance situated at 0.7270-80 which may hold unless there is an agreement made with regard to the US-China trade war.

AUD TRADING RESOURCES:

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX