Stronger than expected Chinese data gave AUD pairs quite a boost today.
Can AUD/USD sustain its uptrend?
Before moving on, ICYMI, yesterday’s watchlist looked at NZD/USD’s uptrend pullback ahead of the U.S. PPI release. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
ECB increased interest rates from 4.25% to 4.50% in a “dovish hike” announcement, as head Lagarde hinted at the end of their tightening cycle
U.S. headline PPI up by 0.7% m/m vs. 0.4% forecast in August, core PPI up by 0.2% as expected
U.S. headline retail sales up by 0.6% m/m in August vs. 0.1% forecast, core retail sales rose by 0.6% vs. 0.4% forecast
Chinese industrial production accelerated from 3.7% y/y to 4.5% in August vs. estimated increase to 3.9%
Chinese retail sales rose from 2.5% y/y to 4.6% in Aug vs. projected improvement to 3.0%
PBOC cut 14-day repo rate from 2.15% to 1.95% and set USD/CNY reference rate lower than expected again
Price Action News
The Australian dollar chalked up another bullish run in today’s Asian session, thanks to surprisingly upbeat data from China. Both industrial production and retail sales figures signaled stronger spending activity in August, reflecting a decent recovery from the earlier declines.
To top it off, the PBOC announced yet another rate cut – this time lowering its 14-day reverse repo rate – in an effort to keep the economy supported. The central bank also set its USD/CNY fix lower than consensus in order to slow the yuan’s slump.
ECB head Lagarde’s speech at 9:45 pm GMT
U.S. Empire State manufacturing index at 12:30 pm GMT
U.S. industrial production at 1:15 pm GMT
U.S. preliminary UoM consumer sentiment index at 2:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
Uncle Sam has another batch of top-tier reports lined up for today, so I’m keeping close tabs on this dollar pair.
AUD/USD has been cruising higher with rising lows connected by an ascending trend line on its short-term chart. Another pullback to this support zone might take place if the U.S. reports spark volatility.
The Fib retracement tool shows where buyers might be waiting, with the 50% level right around the trend line, former resistance zone, and .6450 minor psychological mark.
A larger correction could still test the 61.8% Fib at .6447, but a break below this area could set off a drop to the next floor at S1 (.6420).
On the other hand, a shallow pullback could already find buyers at the 38.2% level near R1 (.6460) and send AUD/USD up to the swing high or the next upside barrier at R2 (.6480).
In any case, make sure you account for the average AUD/USD volatility when trading this one!