AUD market: dollar up after RBA minutes & China GDP data
Minutes of the RBA April meeting showed members considered the case for a 25bps rate hike; upbeat China GDP data bodes well for the economic outlook and what’s next for AUD/USD?
The hawkish tone of the Reserve Bank of Australia’s (RBA) minutes of the April meeting and upbeat China data could provide support to the Australian dollar against the US dollar.
Minutes of the RBA April 4 meeting showed board members considered the case for another 25 basis point increase as inflation “remained too high and the labour market was very tight”. The board also considered the faster-than-expected pickup in population growth and wage growth before opting to pause the rate hikes.
China GDP and Consensus Global growth expectations chart
Still, “it was important to be clear that monetary policy may need to be tightened at subsequent meetings”, suggesting that the Australian central bank may not be done just yet with tightening.
Key focus is now on the Australia January-March CPI due April 26 – persistent inflationary pressures could boost the odds of a rate hike at the RBA’s May 2 meeting.
The market is pricing in the RBA Cash Rate at 3.73% by August (Vs 3.6% now), up from 3.67% on Monday.
FX speculative positioning chart
Furthermore, data released on Tuesday Asia morning showed the Chinese economy grew 4.5% on-year in the January-March quarter, well above 4% expected, and 2.9% in the previous quarter.
Industrial production rose 3.9% in March Vs 4% forecast, up from 2.4% in February, retail sales 10.6% last month Vs 7.4% expected, and above 3.5% in February, while fixed asset investment grew 5.1% in March Vs 5.7% expected, and 5.5% in February.
AUD/USD 240-minute chart
Broadly, China macro data have beaten expectations in recent weeks.
The Economic Surprise Index for China this month hit the highest level at least since 2014 – reflecting the positive spillovers from the economic reopening. Given that China is Australia’s biggest export market, any improvement in China’s growth outlook could boost Australia’s growth prospects.
Speculative positioning in AUD is short, and any repricing higher of RBA rates could be enough to trigger the unwinding of some of those short positions.
AUD/USD technical analysis
On technical charts, AUD/USD has this month held above quite a strong support at the late-March low of 0.6625.
However, the pair has been capped under a stiff hurdle around the 200-day moving average, roughly coinciding with the early-April high of 0.6795. AUD/USD needs to cross above the ceiling of around 0.6800 for the outlook to improve.
AUD/USD daily chart
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.
