The Australian Dollar faces a potential decline as weaker-than-expected GDP data from China puts pressure on the currency. China’s GDP growth of 4.7% in the second quarter, compared to previous expansion of 5.3% and expected 5.1%, could impact the AUD/USD pair. However, the Australian Dollar may continue its upward trend as speculation grows that the Reserve Bank of Australia (RBA) might delay rate cuts or even raise interest rates due to high inflation.
Conversely, the US Dollar is bolstered by improved risk aversion following the attempted assassination of former US President Donald Trump. The incident is seen as potentially boosting Trump’s election prospects, leading to ‘Trump-victory trades’ and a stronger USD. The AUD/USD pair might find support as the USD could weaken due to expectations of a Federal Reserve rate cut in September, driven by softer-than-expected US Consumer Price Index data.
Market reports indicate that China’s economy has operated steadily in the first half of the year, with H1 GDP growing by 5.0% YoY. However, there are external uncertainties and domestic challenges ahead in the second half. Meanwhile, US President Joe Biden condemns political violence and calls for unity following the attempted attack on Trump over the weekend. China’s economic indicators show mixed results, with Retail Sales falling short of expectations in June and Industrial Production slightly surpassing estimates.
Technical analysis suggests that the Australian Dollar is consolidating within an ascending channel against the US Dollar, indicating a bullish bias. The AUD/USD pair may retest the upper boundary of the channel near 0.6800, with immediate support at the nine-day Exponential Moving Average at 0.6643. The table displaying the percentage change of AUD against major currencies shows that the Australian Dollar was weakest against the USD on Monday.
In conclusion, the Australian Dollar could potentially face downward pressure due to weaker China GDP data, while the US Dollar may strengthen following increased risk aversion. The ongoing speculation around RBA actions and potential Fed rate cuts could impact the AUD/USD pair in the coming days. Traders should closely monitor economic indicators and geopolitical events for further insights into the currency market dynamics.
