AUD/USD Off The Lows, But Still Struggling
AUD/USD is trading at 0.7360, above the lows at the 0.71 handle seen in the wake of 2017. The move to the upside is based on the weakness of the greenback: last week’s FOMC Meeting Minutes took a lot of air out of the US dollar.
But what about the Australian dollar? Data hasn’t really been good enough, and this explains the choppiness.
Chinese data helped the Australian dollar in the wake of 2017 but Australia’s No. 1 trade partner is not always even. Producer prices rose by 5.5% in China. While an increase in prices is a good sign for the global economy, it could limit Chinese buys of Australian imports.
And what about the domestic economy? Australian retail sales advanced by 0.2% in December, below 0.4% expected and 0.5% seen beforehand. After the negative GDP read in Q3, there are worries that the diversification to sectors that are not mining is moving slowly.
AUD/USD faces resistance at 0.7375. The pair had already topped this level, but the break was not confirmed. For now, it is a “fakeout”. A further cap awaits at 0.7440 and the round number of 0.75. Support sits at 0.7310 and 0.7250.
More: AUD: Profit-Taking In Short AUD/USD Position; What’s Next? – Credit Agricole
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