AUDUSD Outlook: Further Falls Possible on Global Growth Fears
AUD price, news and analysis:
- Pessimism persists in the financial markets on predictions of a slowdown in global growth, the ongoing US-China trade dispute and a lack of progress towards resolving the partial US government shutdown.
- That has already hit the “risk on” Australian Dollar but it may yet see further losses.
Australian Dollar in focus as pessimism grows
The Australian Dollar, which is widely seen as a proxy for the Chinese economy, could remain under downward pressure following Monday’s report from China that 2018 growth was the slowest in 28 years, at 6.6%. Moreover, Beijing will reduce its 2019 full-year growth target to 6.0-6.5%, according to the Reuters newsagency.
That would likely hit global growth too, with the International Monetary Fund (IMF) predicting Monday that the world economy will expand by 3.5% in 2019 and 3.6% in 2020, down 0.2 and 0.1 percentage points respectively from last October’s forecasts.
The data have dented market sentiment, and the Australian Dollar in particular as the AUD is seen as a currency that investors turn to when confidence is high but shun when they turn to safe havens like the Japanese Yen.
AUDUSD Price Chart, Hourly Timeframe (January 13-22, 2019)
Chart by IG (You can click on it for a larger image)
In addition, hopes of a breakthrough in the US-China trade dispute remain low as the two sides are as far apart as ever on what the US has called decades of state-coordinated Chinese theft of American intellectual property.
Elsewhere, the partial US government shutdown on the issue of the proposed wall between the US and Mexico and a lack of progress in the Brexit talks have hit not just the Australian Dollar but other “risk on” assets such as stocks and crude oil.
AUDUSD technical outlook
As for the technical picture, AUDUSD is already at its lowest level since January 8 but there is little support ahead of the New Year lows under the psychologically-important 0.70 level.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.