News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Bullish
Wall Street
Mixed
Gold
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • Commodities Update: As of 17:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 1.59% Gold: -1.39% Silver: -3.23% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/xchHegk5kh
  • $BTCUSD technical resistance in action. . . #Bitcoin https://t.co/sC21sU5jiX https://t.co/KQdwWtMUNr
  • Forex Update: As of 17:00, these are your best and worst performers based on the London trading schedule: 🇪🇺EUR: 0.34% 🇦🇺AUD: 0.33% 🇳🇿NZD: 0.28% 🇨🇦CAD: 0.21% 🇯🇵JPY: 0.20% 🇬🇧GBP: -0.42% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/6VlOG5bYhZ
  • Sterling has been moving gradually higher against a weak US dollar over the last two months and has now run into topside resistance around the 1.3400 level. Get your $GBPUSD market update from @nickcawley1 here:https://t.co/s7xdXDLzK7 https://t.co/PhpoYK0Cj4
  • Indices Update: As of 17:00, these are your best and worst performers based on the London trading schedule: US 500: 0.42% FTSE 100: 0.42% Wall Street: 0.22% Germany 30: -0.23% France 40: -0.27% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/Zd5U9SNtav
  • Forex liquidity makes it easy for traders to sell and buy currencies without delay, and also creates tight spreads for favorable quotes. Low costs and large scope to various markets make it the most frequently traded market in the world. Learn more here: https://t.co/5uSWKoLkd6 https://t.co/9EBtFSNgZS
  • $EURUSD hitting session highs at 1.1955. Cross-buying in EURGBP also helping the move - Aug high (1.1965) - YTD high 1.2011
  • #Gold Price Forecast: Gold in Free-fall – $XAUUSD Breakdown Levels - https://t.co/2Xc9f8VQyc https://t.co/khZVH4YVRl
  • OPEC+ is leaning towards extending oil production cuts for 2-3 months #oott
  • The AB=CD pattern is simple once you know how to spot it and draw the proper Fibonacci retracements. Make your trading strategy as simple as ABCD here: https://t.co/AKmlmaAZBS https://t.co/4UzjzgcvWG
AUD/USD: Australian Dollar at Risk Ahead of China Trade Balance

AUD/USD: Australian Dollar at Risk Ahead of China Trade Balance

2019-08-07 22:15:00
Rich Dvorak, Analyst
Share:

AUDUSD EYES CHINA TRADE BALANCE, RBA COMMENTARY

  • The Australian Dollar appears at risk of further downside which could be fueled by disappointing China Trade Balance data due for release Thursday
  • AUDUSD implied volatility looks low in consideration of recent US-China trade war developments and dovish shock from the country’s neighboring central bank
  • Check out these tips and strategies for Forex News Trading

In our most recent Australian Dollar outlook, we highlighted how AUDUSD in particular is exposed to downside risks stemming from the US China trade war. Despite the Reserve Bank of Australia (RBA) providing language slightly more hawkish than was expected, Governor Philip Lowe still reiterated the central bank’s willingness to ease monetary policy further if needed. That said, Thursday’s release of China trade balance data could provide Australian Dollar bears with another bit of evidence that the RBA will likely need to cut rates again in the near future.

CHINA TRADE BALANCE – IMPORTS (YEAR-OVER-YEAR, USD)

China trade balance imports chart

The Australian economy is closely tied to China with approximately one-third of Australia’s exports shipped to be consumed by the Chinese. Seeing that the Chinese economy has come under immense pressure as of late owing to the ongoing trade war with the United states, it appears likely that the trend of declining imports will continue which stands to sink spot AUDUSD. Another anecdote that might suggest additional weakness for the Aussie ahead is the relationship between AUDUSD and USDCNH.

AUDUSD PRICE CHART OVERLAID WITH CHINESE YUAN: DAILY TIME FRAME (JANUARY 24, 2019 TO AUGUST 07, 2019)

Spot AUDUSD correlation to the Chinese Yuan price chart

Chart created using TradingView

The Chinese Yuan, illustrated as CNHUSD in blue above, continues to weaken in light of US China trade war developments as uncertainty runs rampant and fears of slowing GDP growth mount. With the latest flareup in trade war tension, risk assets have spiraled lower along side the Chinese Yuan. As such, given the strong correlation between AUDUSD and CNHUSD, it is not inconceivable that spot AUDUSD could keep marching lower as the currency pair carves fresh multi-year lows dating back to the great financial crisis.

RBA INTEREST RATE PROBABILITIES

RBA Interest Rate Probabilities Chart

Additionally, expectations for the RBA to cut interest rates again this year have surged. Aside from the resurgence of US China trade war risk, the jump in the probability that the RBA policy interest rate will be halved to 0.50% by the end of 2019 was likely propelled further by a surprise 50bps interest rate cut by the Reserve Bank of New Zealand – a neighbor to Australia with closely intertwined economies. Consequently, the RBA is likely to follow suit of the RBNZ with more accommodative monetary policy.

AUDUSD PRICE CHART: DAILY TIME FRAME (DECEMBER 14, 2018 TO AUGUST 07, 2019)

Spot AUDUSD price chart technical analysis

According to AUDUSD overnight implied volatility of 10.35%, spot prices are expected to fluctuate between 0.6725-0.6798 with a 68% statistical probability. Yet, the overnight implied volatility reading for the Aussie seems a bit low considering the current market dynamics and looming risk catalysts.

-- Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES