AUD/USD has been quite corrective and volatile, trading below 0.7200 area with a daily close. AUD has been quite positive amid the recently published economic reports which led to certain bullish momentum. However, the question is still open how reliable and sustainable it would be in the coming days.
China is Australia's largest trading partner with over 30% of the Australian exports going to China. Trade tensions have fueled an economic slowdown in Australia. As a result, China's GDP came in at 6.4% in Q4 2018 which is the weakest quarterly GDP growth in the latest 10 years. Recently AUD climbed higher in light of strong export data amid China's official trade balance figures while MI Inflation Expectation also increased to 3.7% from the previous value of 3.5%. Moreover, recently Westpac Consumer Sentiment showed significant growth to 4.3% from the previous value of -4.7%.
On the other hand, recently US CPI report was published with a slight increase to 0.0% from the previous value of -0.1% but it failed to meet the expectation for a 0.1% gain. The Core CPI report was published unchanged at 0.2% as expected but that did not quite help the currency to sustain the impulsive momentum it had over AUD. Today US Core Retail Sales is expected to decrease to 0.0% from the previous value of 0.2%, PPI is expected to increase to 0.1% from the previous value of -0.2%, Retail Sales are expected to decrease to 0.1% from the previous value of 0.2% and Core PPI is expected to increase to 0.2% from the previous value of -0.1%.
Meanwhile, the US-China trade talks are pushing ahead as the deadline is approaching. If both sides do not settle a trade a deal by March 1, US tariffs on $200 billion worth of imports from China are scheduled to rise 25% from 10% which will eventually increase the inflationtary pressure and costs in the sectors of consumer electronics and agriculture. If the upcoming meetings do not contribute to the positive outcome of the trade talks, it is certainly bearish for AUD.
Now let us look at the technical view. The pair is currently trading higher above 0.71 area. Moreover, the price is expected to jump to 0.7200 and higher as the price remains above 0.70 area with a daily close and makes higher highs.
SUPPORT: 0.7000-50, 0.7100
RESISTANCE: 0.7200-50, 0.7350
BIAS: BEARISH
MOMENTUM: VOLATILE