Australian Dollar Eyes China Q4 GDP Data as APAC Trading Kicks Off

AUD, AUD/USD, China Q4 GDP, Technical Outlook – Talking Points

  • Australian dollar in focus as China’s Q4 GDP growth rate data prepares to cross the wires
  • Asia Pacific markets face an eventful week, with the Australian jobs report and the Bank of Japan
  • AUD/USD looks to a consolidating resistance zone as prices start trading in the Asia-Pacific region slightly higher

Asia Pacific forecast for Monday

The focus is on AUD/USD at the start of the Asia Pacific trading week, as China’s Q4 GDP data is set to cross the wires. Analysts expect growth to slow to 3.6% in the fourth quarter year on year, according to a Bloomberg survey. This would be the slowest growth rate in 18 months. The Australian dollar may react to the print data due to Australia’s economic correlation with China.

The lackluster growth rate of the world’s second-largest economy is likely attributed to China’s beleaguered real estate sector and widespread Covid-19 shutdowns during the October-December period. Chinese policymakers initially tightened rules on lending earlier this year in response to the Evergrande crisis. But now, policy makers are expected to ease policy to stimulate growth, which is in stark contrast to other economies around the world that are beginning to tighten policy. The one-year loan prime rate (LPR) may be lowered as soon as this week.

China will also report December retail sales, industrial production, and fixed asset investment, all of which are expected to decline from the previous month.. However, AUD/USD may react to the upside if the data set shows a better-than-expected picture as a whole. Later today, Indonesia’s December trade balance and Japan’s tertiary industry index (November) will cross.

Next week will also be fairly busy, as it will be DailyFX Economic Calendar View several potentially high-impact events scheduled to be launched. The Bank of Japan will announce its interest rate decision on Tuesday, although rates are expected to remain largely negative. However, the Bank of Japan may She chooses to change the language around her inflation target. Later in the week, it will skip the Australian jobs report for December, followed by the January PMI report later in the week. Japanese CPI data for December is due on Thursday.

AUD/USD technical forecast

The AUD/USD bulls managed to post gains last week, but their strength waned over the weekend after a major conflict zone extending into July was capped with a higher move. The bearish 100-day simple moving average (SMA) provided consolidated resistance. Currently, prices are slightly higher in early Asia Pacific trading, just above the 38.2% Fibonacci retracement level of the October/December move. The lower low faces potential support from the September low swing zone.

AUD/USD daily chart

AUD-dollar chart

The graph was created using TradingView

— By Thomas Westwater, Analyst for DailyFX.com

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