Tuesday, October 13, 2015

Chinese trade balance: What to expect in AUD/USD?

FXStreet (Guatemala) - AUD/USD has been consolidated at key resistance and the highest levels since the late August/September downtrend and has been trading on the bid with conviction and positive momentum.

AUD/USD quick recap

AUD/USD has been first out of the blocks when it comes to the commodity-bloc currencies while a minor recovery has started to take place in base metals, gold and oil. Gold has been gaining on the idea that the Fed is unable to hike rates any time soon and a weaker greenback has also supported the Aussie to key resistance just ahead of the 0.74 barrier and without a further catalyst, bulls have struggled and run out of momentum.

Chinese trade balance expected negative for AUD/USD

However, today comes with the Chinese trade balance that might spice some life into the trade again. The data are scheduled at 1pm Syd/10am local although is not always released bang on time and can be a little late. The key element here is the price of commodities, and as weak as they have been and only having started to climb again, the September Y/Y import data will reflect that which needs to be taken into consideration. Last month's import values certainly reflected that -13.8%. Last month's exports were -5.5% and were falling to all major export regions. For Sep, the market median forecast is trade balance at US$48.2bn, exports at -6.0% and imports -16.0%.

"However, last month the trade data in CNY terms came out well before the USD estimates which most forecasters still produce. So AUD may well be sensitive to any divergence from the -7.4% y/y exports and -16.5% y/y imports median forecasts according to Bloomberg, even though based on just 5 responses," explained analysts at Westpac Banking international.

AUD/USD bullish/neutral (Spot 0.7342, above Sep highs)

As noted earlier, the price is at key resistance and the charts are bullish targeting 200 DMA 0.7602 for the medium term while the hourly chart's still offer prospects for the 0.7408/27 region near term. However, AUD/USD's downside may well be the most likely benefactor of the release unless there are any positive surprises that are some way of the median consensus.

Should the bears take back control, the downside towards the 0.72 psychological level has 0.7315/30 and 0.7297 S1 (20 SMA 4hr) come as first major supports.
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