AUDUSD Gains Despite Weaker Than Expected Chinese Data

China posted weaker than expected import, export and trade balance data on July 13^th but this has failed to make the AUDUSD trade lower. The latest release shows that China’s imports (YoY) (JUN) have slumped by 2.3% even though the figure was expected to be – 1.2% and the previous reading being 5.1%. The Trade balance too showed poor performance as it printed at 311.20b from an expected 323b.

China attributes the poor performance figures to less investment in the manufacturing sector due to uncertainties about oil prices and future demand for durable goods.

AUDUSD has erased all the losses

Poor data from China usually has a negative effect on the AUD but on this occasion, the AUDUSD has been paring the losses from the Asian session and continued heading to the bullish side. The AUDUSD had peaked at 0.76575 towards the Asian open and immediately begun its descent down to the 0.75788 in anticipation of the news. The AUDUSD has so far drifted off the day’s lows to trade at 0.76184 by the time of writing, especially with very little newsworthy releases coming from NY.

The AUDUSD can be expected to continue drifting higher as the pair continues in the slightly bullish trend that began early last week. The 0.75788 level that has so far been the lowest of the day had earlier acted as a strong resistance but that was broken during Tuesday trading. The level will be under close watch to determine if it will fare well as a good support for the pair into the coming sessions.

AUDUSD remains in the 0.76575 – 0.74077 range

From an interim perspective, the AUDUSD remains in a monthly range of 0.76575 and 0.74077. It currently trades at the bullish territory within the range and more good news from China or Australia in the coming days can prop the pair beyond the range ceiling. Most of the moves to the bear side at the moment can simply be treated as profit-taking moves as long as the pair remains above the 8^th July lows at 0.74780.

The main issue that may negate this upward move by the AUDUSD is the upcoming BOE’s monetary policy decisions scheduled for Thursday 14^th July.  Most traders are keeping off the market because of the uncertainty surrounding the BOE’s next moves now that they have the Brexit concerns to factor into their monetary policies. In other correlated currencies, there is a mild dollar selloff in play giving suggestions that the AUDUSD is still exposed to a bit of sideways trading even if the pair remains nested in bullish territory.