Australian Dollar Declines Amid Disappointing China Trade Data
The Australian Dollar (AUD) continued its downward trend against the US Dollar (USD) following China's recent trade report. China's trade surplus for October narrowed to CNY 640.4 billion from CNY 645.47 billion. This was driven by a 0.8% year-over-year drop in exports and a 1.4% increase in imports.
China's Trade Surplus Misses Expectations
In US dollar terms, China's trade surplus fell short of forecasts, recording +$90.07 billion compared to the expected +$95.60 billion.
Australia's Trade Performance
Meanwhile, Australia's trade surplus for September hit 3,938 million month-over-month, surpassing analysts’ expectations. Exports rose by 7.9% during that period.
US Dollar Strength Gains Despite Economic Challenges
The US Dollar Index (DXY) rebounded to approximately 99.80, benefiting from mixed economic signals including notable job cuts.
- The ADP Employment Change increased by 42,000 in October.
- The US ISM Services PMI climbed to 52.4.
- The US government shutdown remains unresolved after 14 failed attempts to progress.
Louis Fed President remarked on persistent inflation pressures, while Fed Chair Jerome Powell expressed caution regarding potential rate cuts in December.
Other Economic Indicators
- China’s RatingDog Services PMI decreased slightly to 52.6 in October.
- The S&P Global Australia Services PMI edged up to 52.5.
- The Reserve Bank of Australia kept the Official Cash Rate steady at 3.6%, emphasizing ongoing inflation concerns.
Technical Outlook for AUD/USD
The AUD/USD pair traded near 0.6470, with technical support identified around 0.6460. Resistance levels are noted at the 0.6508 and 0.6535 exponential moving averages (EMAs), while potential downward targets align with lower rectangular boundaries.
"The AUD/USD traded around 0.6470, with possible technical support at 0.6460 and resistance near the 0.6508 and 0.6535 EMAs."
Author’s summary: The Australian Dollar weakens against the US Dollar due to weaker-than-expected Chinese trade figures, steady US economic indicators, and cautious central bank policies amid inflation concerns.