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

Highlights

• The AUD/USD and the NZD/USD ended a bullish week on a bearish footing on Friday.
• This morning, there are no economic indicators from Australia or New Zealand to move the dial.
• However, China’s GDP and industrial production numbers will set the tone later this morning.

It is a quiet start to the day for the AUD/USD and NZD/USD on Monday. There are no economic indicators from Australia or New Zealand for investors to consider this morning.

The lack of economic indicators will leave investors to consider economic indicators due out of China later this morning. Q2 GDP, industrial production, fixed asset investment, and retail sales will move the dial.

While the markets are betting on support from Beijing to fuel an economic recovery, weak global demand remains a hindrance. The numbers for June will give investors a sense of how much stimulus will be needed to drive growth.

Economists forecast the Chinese economy to expand 7.3% year-over-year but by just 0.5% in the second quarter. Industrial production forecasts are gloomy, with economists projecting production to increase by 2.7% year-over-year versus 3.5% in May, with retail sales to rise by 3.2% versus 12.7% in May.

The markets should discount the year-over-year GDP numbers, with the end of the zero-COVID policy affecting the numbers.

The European Session

It is a quiet day ahead on the European economic calendar. Finalized inflation numbers from Italy will be in focus. However, we do not expect the figures to influence the Aussie or the Kiwi.

However, investors should consider ECB chatter. ECB President Christine Lagarde and Chief Economist Philip Lane are on the calendar to speak today. Post-summer forward guidance will draw interest.

The US Session

It is a quiet day on the US economic calendar. NY Empire State Manufacturing numbers for July will be in focus. However, barring a sharp decline, we do not expect the report to influence market risk sentiment.

According to the ISM survey, the US manufacturing sector contracted for the eighth consecutive month in June. Investors shouldn’t expect great numbers.

AUD/USD Price Action

Daily Chart

The Daily Chart showed the AUD/USD sitting below the psychological $0.69 resistance level and the $0.6878 – $0.6905 resistance band.

Notably, the AUD/USD remained above the 50-day ($0.67035) and 200-day ($0.67498) EMAs, signaling bullish momentum over the near and longer-term time horizons.

The 50-day EMA closed in on the 200-day EMA and reflected bullish momentum after the bullish Wednesday and Thursday sessions.

Looking at the 14-Daily RSI, the 60.87 reading signals a bullish trend and suggests a move through the resistance band to target $0.6950. However, a fall to sub-$0.68 could bring the upper level of the $0.6755 – $0.6729 support band and the 200-day EMA ($0.67498) into play.

4-Hourly Chart

Looking at the 4-Hourly Chart, the AUD/USD faces resistance at the $0.6850 psychological level. After the Friday session, the AUD/USD sits below the $0.6878 – $0.6905 resistance band. However, the AUD/USD remains above the 50-day ($0.67491) and 200-day ($0.67052) EMAs, sending bullish signals. Significantly, the 50-day EMA pulled away from the 200-day EMA, supporting a run at $0.69.

However, the AUD/USD must avoid sub-$0.68 and the $0.6755 – $0.6729 support band to target $0.69.

Looking at the RSI indicator, the 14-4H RSI reading of 60.32 indicates bullish momentum, with buying pressure outweighing selling pressure. The RSI is aligned with the EMAs and supports a run at $0.69.

NZD/USD Price Action

Daily Chart

The Daily Chart showed the NZD/USD sitting below the $0.6397 – $0.6380 resistance band. However, the EMAs sent bullish signals. The Kiwi dollar sat above the 50-day ($0.61903) and 200-day ($0.62248), sending bullish near and longer-term signals.

Notably, the 50-day EMA closed in on the 200-day EMA, supporting the currently bullish near-term trend.

Looking at the 14-Daily RSI, the 67.49 reading sends bullish price signals. A breakout from the lower level of the $0.6380 – $0.6397 resistance band would give the bulls a run at $0.6397 and $0.64.

4-Hourly Chart

Looking at the 4-Hourly Chart, the NZD/USD faces strong resistance at the $0.64 psychological level. After the bearish Friday session, the NZD/USD sits below the $0.6380 – $0.6397 resistance band. However, the NZD/USD holds above 50-day ($0.62592) and 200-day ($0.61897) EMAs, supporting a move through the $0.6380 – $0.6397 resistance band.

Notably, the 50-day EMA pulled further away from the 200-day EMA, a bullish signal.

The 14-4H RSI reading of 65.83 signals bullish momentum, with buying pressure outweighing selling pressure. Significantly, the 14-4H RSI aligns with the EMAs and signals a possible move through the $0.6380 – $0.6397 resistance band to target the July high of $0.64117. Economic indicators from China must impress to support a breakout session.