AUD/USD and NZD/USD Fundamental Analysis: China GDP in Focus

It is a busy morning ahead for the AUD/USD and the NZD/USD. The RBA meeting minutes will draw interest and influence the AUD/USD. After the April decision to stand pat, RBA Governor Philip Lowe warned that hitting the pause button on interest rate hikes did not mean an end to the monetary policy tightening cycle.

The minutes will give the markets a sense of how other Board members view the macroeconomic environment and whether there is an appetite for further tightening.

While the RBA minutes will influence, economic data from China will have more influence. Q1 GDP, fixed asset investment, industrial production, and retail sales figures will be in focus.

Economists forecast the China economy to grow by 2.2% in Q1 after stalling in Q4 2022. Better-than-expected numbers would drive commodities and commodity currencies. However, we expect industrial production and retail sales to also impact market risk sentiment.

Considering the RBA and the RBNZ views on the global economic outlook, today’s numbers out of China could fuel bets of further policy moves. Softer numbers could force the RBA and the RBNZ into extended holding patterns.

Later today, US economic indicators from the US are unlikely to influence, with housing sector data in focus. However, Fed chatter will move the dial.

AUD/USD Price Action

The Aussie was down 0.01% to $0.66997. A mixed start to the day saw the AUD/USD fall to an early low of $0.66934 before rising to a high of $0.67032.

Technical Indicators

The AUD/USD needs to move through the $0.6700 pivot to target the First Major Resistance Level (R1) at $0.6719 and the Monday high of $0.67192. A return to $0.6715 would signal a bullish session. However, the Aussie Dollar would need the China data and RBA minutes to support a breakout session.

In the case of another breakout session, the Aussie would likely test the Second Major Resistance Level (R2) at $0.6738 and resistance at $0.6750. The Third Major Resistance Level (R3) sits at $0.6777.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6681 in play. However, barring a risk-off-fueled sell-off, the AUD/USD pair should avoid sub-$0.6650. The Second Major Support Level (S2) at $0.6662 should limit the downside.

The Third Major Support Level (S3) sits at $0.6624.

Looking at the EMAs and the 4-hourly chart, the EMAs send bearish signals. The AUD/USD sits below the 100-day EMA, currently at $0.67001. The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

A move through the 100-day ($0.67001) and 50-day ($0.67039) EMAs would support a breakout from the 200-day EMA ($0.67166) and R1 ($0.6719) to give the bulls a run at the R2 ($0.6738) and $0.6750. However, failure to move through the 50-day EMA ($0.67039) would leave S1 ($0.6681) in view. A move through the 50-day EMA would send a bullish signal.

NZD/USD Price Action

This morning, the Kiwi was up 0.04% to $0.61828. A range-bound start to the day saw the NZD/USD fall to an early low of $0.61756 before rising to a high of $0.61865.

Technical Indicators

The NZD/USD needs to move through the $0.6185 pivot to target the First Major Resistance Level (R1) at $0.6208 and the Monday high of $0.62117. A return to $0.6210 would signal a bullish session. However, the economic data from China must support a breakout.

In the case of a breakout session, the Kiwi would likely test the Second Major Resistance Level (R2) at $0.6235 and resistance at $0.6250. The Third Major Resistance Level (R3) sits at $0.6286.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6157 in play. However, barring a data-off-fueled sell-off, the NZD/USD pair would likely avoid sub-$0.6130. The Second Major Support Level (S2) at $0.6134 should limit the downside.

The Third Major Support Level (S3) sits at $0.6084.

Looking at the EMAs and the 4-hourly chart, the EMAs send bearish signals. The NZD/USD sits below the 50-day EMA, currently at $0.62310. The 50-day EMA fell back from the 100-day and 200-day EMAs, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

A move through R1 ($0.6208) would give the bulls a run at the 50-day EMA ($0.62310) and R2 ($0.6235). However, failure to move through the 50-day EMA ($0.62310) would leave S1 ($0.6157) in play. A move through the 50-day EMA ($0.62310) would send a bullish signal.