Aussie Drops Following Soft Chinese Trade Report

AUD/USD is down quite sharply today, making a one-week low at 0.7580, which is one big figure below the intraday high. Subsequent bounces have stalled above 0.7600, and the Aussie remains heavy. The move was triggered by a big miss in China trade data, with exports down 15% in March, which has sparked speculation of a sub-7.0% outcome in Wednesday’s GDP data.

This follows fresh lows in iron ore prices on Friday, while Australian Treasurer Hockey said in an interview with AFR that the government is assuming that low prices of the metal will reduce revenue forecasts by $25 billion over the next four years. AUD/USD’s cycle low at 0.7533, which was seen on Apr-2, is now in scope.

China reported a narrowing in its trade surplus to $3.1 billion in March after holding steady just above $60 billion in January and February. Compared to year ago levels, imports slipped 12.7% year over year and exports fell 15.0% year over year. It is a 5th straight monthly decline in imports. The CNY firmed in March, and there’s growing anxiety over the slippage in trade and the growing fears of a slowdown in China’s economy. In CNY terms the trade surplus fell to 18.2 billion versus February’s 307.5 billion, with imports down 12.3% year over year and exports off 14.6% year over year.

The AUD/USD is testing the lows made in March, after slicing through the 10-day moving average at 0.7638, which should now prove to be solid resistance. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a sell signal.  This occurs as the spread (the 12-day moving average minus the 26-day moving average) crosses below the 9-day moving average of the spread.  The index moved from positive to negative territory confirming the sell signal.  The RSI (relative strength index) moved lower with price action reflecting accelerating negative momentum while printing a reading of 39, which is on the lower end of the neutral range.

Aussie Drops Following Soft Chinese Trade Report
Aussie Drops Following Soft Chinese Trade Report

Leave a Reply

Your email address will not be published. Required fields are marked *