AUD to USD Forecast: Trade Data Shifts Focus to China and Australia

Wednesday Overview of the AUD/USD

The AUD/USD rallied 0.93% on Wednesday. Reversing a 0.06% loss from Tuesday, the Australian dollar ended the session at $0.65640. The Australian dollar fell to a low of $0.64925 before rising to a high of $0.65815.

Trade Data for Australia and China Under the Spotlight

On Thursday, trade data from Australia and China will garner investor interest. Australia has a trade-to-GDP ratio above 50%, with 20% of the Australian workforce in trade-related jobs.

An improving demand environment would support the Australian economy and the Aussie dollar.

Economists forecast the Australian trade surplus to widen from A$10.959 billion to A$11.500 billion in January. Beyond the headline number, investors must consider imports and exports.

Trade data from China will also impact buyer demand for the Aussie dollar. China accounts for one-third of Australian exports. Economists expect the US dollar trade surplus to widen from $75.34 billion to $103.70 billion. However, the devil will be in the details, with imports and exports as the focal points.

Better-than-expected numbers could support the buyer appetite for the AUD/USD and riskier assets.

Beyond the numbers, the National People’s Congress (NPC) remains a focal point. A meaningful stimulus package would give the Aussie dollar a boost.

US Economic Calendar: Jobless Claims and the Fed in Focus

Later in the day, the US labor market will be in focus for the second session. Investors should consider initial jobless claims data after weaker-than-expected jobs data from Wednesday. Economists expect initial jobless claims to remain at 215k. An unexpected spike could fuel bets on an H1 2024 Fed rate cut and fears of a hard landing.

A weaker labor market could impact wage growth and reduce disposable income. Downward trends in disposable income could curb consumer spending and dampen demand-driven inflation.

Other stats include trade data for January. However, the trade figures are unlikely to influence the Fed rate path. The focus remains on wage growth and inflation.

Beyond the numbers, Fed Chair Powell testimony and FOMC member speeches also need monitoring. FOMC member Loretta Mester is on the calendar to speak. Views on the economy, inflation, and the timeline for rate cuts could move the dial.

Short-Term Forecast

Near-term AUD/USD trends will hinge on the US Jobs Report, trade data from China, and the National People’s Congress (NPC). Softer US labor market conditions and a pickup in demand from China could boost investor appetite for the Aussie dollar. However, NPC news also needs consideration.

AUD/USD Price Action

Daily Chart

The AUD/USD hovered above the 50-day EMA while remaining below the 200-day EMA, sending bullish near-term but bearish longer-term price signals.

An Aussie dollar break above the 200-day EMA would support a move to the $0.66162 resistance level.

NPC-related news, trade data from Australia and China, and the US economic calendar need consideration.

However, a drop below the 50-day EMA would bring the $0.64900 support level into play.

A 14-period Daily RSI reading of 54.13 indicates an AUD/USD break above the $0.66162 resistance level before entering overbought territory.

4-Hourly Chart

The AUD/USD sat above the 50-day and 200-day EMAs, sending bullish price signals.

An AUD/USD break above the Wednesday high of $0.65815 would support a move to the $0.66162 resistance level.

On the other hand, a drop below the 200-day EMA would give the bears a run at the 50-day EMA. A fall through the 50-day EMA would bring the $0.64900 support level into play.

The 14-period 4-Hourly RSI at 65.69 indicates an AUD/USD move to the $0.66162 resistance level before entering overbought territory.