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.

Free Trading Guides
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Bearish
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
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
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
More View more
Real Time News
  • Foreign exchange – or “#forex” – markets often pay close attention to politics and central bank policy. We offer a model for traders to gauge their impact on exchange rates. Get your market insight from @ZabelinDimitri and @CVecchioFX here: https://t.co/FbXc1Awu6a https://t.co/Qbhs4ndgPa
  • Why must financial market traders monitor both monetary and fiscal policy? Find out from @MartinSEssex here: https://t.co/Fkzk88Y5gm https://t.co/AldbSctm9V
  • Do you know how to properly Identify a double top formation? Double tops can enhance technical analysis when trading both forex or stocks, making the pattern highly versatile in nature. Learn more about the double top formation here: https://t.co/yF133btXFd https://t.co/Sjnr0iVgAf
  • Upside momentum stalls with the #DAX and #FTSE 100 vulnerable to testing lower levels as the economic backdrop deteriorates further. Get your #equities technical analysis from @JMcQueenFX here: https://t.co/BFIaXTfDcs https://t.co/q0Mso4zWlT
  • RT @iv_technicals: *TRUMP SAYS HE'D USE TARIFFS IF NEEDED TO PROTECT OIL INDUSTRY - BBG #OOTT #WTI $USO
  • After the pattern is composed with the closing of the signal candle, then you can look to the following candle to identify a clear bias and risk points. Learn how to apply this knowledge to a trading strategy here: https://t.co/uh3NwgHBVv https://t.co/yl4KUMNmUh
  • Asia’s vast and growing importance to the world economy is not yet matched by the presence of a currency trading center to rival the established order. Get your update on market drivers in Asia here: https://t.co/r3Ku0p9dw1 https://t.co/CU5vMilpLH
  • - Gold prices may suffer if FOMC minutes spark risk aversion, concerns about liquidity - #XAUUSD could face additional selling pressure if employment data sours sentiment - Ballooning credit risks from distressed corporate debt markets may cap gold’s gains https://www.dailyfx.com/forex/fundamental/forecast/weekly/chf/2020/04/04/Gold-Prices-May-Fall-on-FOMC-Minutes-Recession-Credit-Risks.html
  • The bear flag pattern is a popular price pattern used by technical traders within the financial markets to determine trend continuations. Learn how to spot a bear flag pattern here: https://t.co/zg8QzS3ytS https://t.co/A8fvEmmh0K
  • Have you joined @DailyFX @facebook group yet? Discuss your #forex strategies and brush up on your skills with us here: https://t.co/VsfbITIb6B https://t.co/qSLzCiGVxa
AUD/USD Downtrend in Focus Despite Stronger Chinese Trade Surplus

AUD/USD Downtrend in Focus Despite Stronger Chinese Trade Surplus

2019-08-08 03:30:00
Daniel Dubrovsky, Analyst
Share:

AUD/USD, China Trade Surplus, Trade Wars Talking Points

  • Australian Dollar looks past growth-supportive Chinese trade data
  • Rising US-China trade tensions is a clear downside AUD/USD risk
  • Bounce in the Aussie may be corrective, Hammer shows indecision

Trade all the major global economic data live as it populates in the economic calendar and follow the live coverage for key events listed in the DailyFX Webinars. We’d love to have you along.

China Trade Balance Surprise Indicates Better Outcome for Economic Growth

The Australian Dollar, the markets go-to liquid China proxy, looked past supportive Chinese trade data. In July, exports out of China (in USD terms) unexpectedly increased by 3.3% y/y versus -1.0% anticipated. Meanwhile, imports contracted less-than-expected at -5.6% compared to -7.3% in June. Combining the two made for a trade surplus of $45.06b, much higher than the $42.65b estimate but down from $50.98b prior.

What this means for China is a more supportive outcome for local growth. Subtracting imports from exports yields you the trade balance, which is one of the four components of GDP. A positive outcome may add to growth. However, the Australian Dollar and equities showed a tepid reaction to the data as trade relations between the world’s largest economies risk souring.

Hours earlier, the People’s Bank of China set the Yuan reference rate at 7.0039 per USD which was the first time since 2008 a level above 7.00 was set. While this was lower than the 7.0156 estimate, it could risk fueling tensions with Washington. US President Donald Trump frequently accuses China of currency manipulation. Earlier this week, the US Treasury Department labeled China as a currency manipulator.

With Trump ready to impose 10% tariffs on about $300b in Chinese imports come September, there is a risk that the levy could rise to perhaps 25%. This is because a weaker Yuan can offset the higher cost that US consumers can expect from the tariffs, aiding to negate their impact as a higher tax and perhaps leading to retaliation. Rising trade tensions can add scope for the RBA to ease, weakening AUD/USD.

AUD/USD Technical Analysis

For the time being, the bounce in the AUD/USD seems corrective given recent prolonged weakness. Prices were unable to close below March 2009 lows, leaving a Hammer candlestick. This is a sign of indecision and with technical confirmation, could precede a turn higher. Near-term resistance appears to be a descending channel from the middle of April – pink parallel lines on the chart below.

AUD/USD Daily Chart

AUD/USD Downtrend in Focus Despite Stronger Chinese Trade Surplus

Chart Created in TradingView

Australian Dollar Trading Resources

--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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

DISCLOSURES

News & Analysis at your fingertips.