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AUD/USD Kick-Starts Bearish Reversal Amid Disappointing Chinese Economy

AUDUSD exhibited bearishness in most of 2022 until early last month despite RBA’s (Reserve Bank of Australia) rate hikes. Nonetheless, the Federal has been hiking quicker, which has kept the US dollar highly bullish and AUDUSD bearish. That happened until the Fed confirmed it would slow the hiking pace and pause anytime soon.

Yet, the market stance has shifted again following the European Central Bank and Federal policy meetings last week after a 50bp rate increase. Though it represented a decline from early 75bp hikes, the rhetoric was not as dovish as markets’ expectations. That turned the feeling negative within the financial space, and the pair printed an enormous bearish candle.

AUD-USD Daily Chart – 200 SMA Presents Resistance

Buyers showed hesitation around the 200 Simple Moving Average on the 24hr chart beyond and posted a Doji candle. That meant a bearish reversal signal, and sellers re-joined to send the prices lower. Now, they are encountering the 100 Simple Moving Average, which contained the dip at first.

RBA’s early today meeting minutes show the Australian economy isn’t impressive, though China’s condition amidst ongoing lockdowns is worse, and it has weighed on the Aussie. China’s industrial production noted only a 2.2% increase annually in November, lower than the 3.5% expectations – a slowdown from October’s 5.0%.

Also, retail sales dropped by 5.9% Y/Y in that period, worse than the consensus of -4.0%. Also, it confirms an increase from October’s -0.5% dip. That comes as the surveyed unemployment rate increased to 5.7%, exceeding the 5.6% prediction while climbing from the previous 5.5%. Thus, the condition remains deteriorated for the Aussie. Market players can expect the currency to soon break beneath the 100 Simple Moving Average.

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