- China decided to stick with its economic growth target of 5%.
- There was a significant surge in Australia’s current account surplus in Q4.
- Markets are eagerly anticipating Powell’s testimony on Wednesday.
The AUD/USD price analysis revealed a bearish tone on Tuesday as the currency fell after disappointing news from China. Notably, China decided to stick with its economic growth target of 5%. However, analysts believe achieving this target will require more stimulus than what is currently there.
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The Australian dollar is sensitive to news from China and is considered a proxy for the yuan. As a result, a poor outlook on China’s economy weighs on the currency.
Meanwhile, investors shrugged off data from Australia revealing a significant surge in the country’s current account surplus in Q4. Consequently, there is less likelihood of a recession. Additionally, government spending rose in the same period. This upbeat data adds significantly to estimates of fourth-quarter gross domestic product.
A well-performing economy allows the RBA room to hold high-interest rates for longer. Although investors do not expect any more rate hikes from the RBA, the first rate cut might not come until September.
Meanwhile, the possible timing for rate cuts in the US could soon change as investors await more economic data. Additionally, markets are eagerly anticipating Powell’s testimony on Wednesday. In his speech, he might give clues on when the Fed will start cutting rates.
On the other hand, major data from the US includes the nonfarm payrolls report. Economists expect a slowdown in employment last month. However, US employment figures have constantly surprised markets. Another blockbuster report could lead to more declines in AUD/USD as the dollar rallies.
AUD/USD key events today
- US ISM Services PMI
AUD/USD technical price analysis: Previous low broken, eying a new bottom
On the technical side, the AUD/USD pair has broken below the previous low and will likely soon make a new low. Moreover, the price has fallen far below the 30-SMA, showing a steep bearish move. Meanwhile, the RSI is heading for the oversold region, indicating solid bearish momentum.
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With such strong bearish momentum, the price will likely soon reach the 0.6450 support level. Additionally, if bulls return at any point, they will find it hard to break above the 30-SMA and the bearish trendline. A bearish trend will develop if the price continues to make a series of lower lows and highs.
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- Source: https://www.forexcrunch.com/blog/2024/03/05/aud-usd-price-analysis-chinese-news-weigh-down-aussie/
