AUD/USD defends bullish channel

The Australian dollar traded somewhat higher Monday, following some Chinese macro data. At the time of writing, the AUD/USD pair was spotted changing hands near 0.7215.

Chinese data in focus

Earlier in the day, China unexpectedly cut interest rates for the first time since 2020 to counter the economic slowdown in the country . The Chinese move has prompted speculation that the current global monetary policy tightening will be short-lived, sending stocks, metals, and commodity-linked currencies higher.

Additionally, Chinese GDP slowed to 4% year-on-year in the last quarter of 2021, down from 4.9% previously. On the other hand, the quarterly change grew notably at 1.6%, up from 0.2% in the third quarter.

At the same time, Chinese industrial production improved to 4.3% yearly, up from 3.8% in November . Lastly, retail sales more than halved from 3.9% to 1.7% in December .

After the mixed data, the Chinese National Bureau of Statistics (NBS) head Ning Jizhe said that China expects the operation of its property market to keep pace with steady growth of investment in the sector this year. However, he also added that there was room for monetary policy to support growth.

During the US session, banks will be closed due to Martin L. King’s Birthday bank holiday, likely resulting in thin liquidity (and low volatility) throughout the rest of the day.

Steady uptrend on daily chart

Technically speaking, the pair has been in a steady uptrend since its December lows, and bulls are still defending the lower bound of the channel. Thus, the short-term support seems to be in the 0.72 region.

However, if the Aussie drops down from the channel, we could see further selling pressure, targeting 0.7170 or 0.71.

On the other hand, should the bullish momentum prevail, the Australian dollar might rally toward 0.7250, with the key resistance spotted near 0.7320.

HSBC bullish on AUD

One of the large investment banks – HSBC – has recently stated a bullish view on the Aussie.

The AUD has benefited from sizeable current account surpluses over the past few quarters, helped by a surge in commodity prices. This is unlikely to change in the coming quarters, as export growth should remain strong, supported by high commodity prices; China’s policy shift to boost growth and stabilization in global growth slowdown. All this should continue to support the AUD.

Some of these positive catalysts may not kick in more meaningfully until later this year. However, the AUD may still struggle over the near term, given its vulnerability to swings in risk appetite as the Federal Reserve nears its first rate hike with the need to tap the inflation brakes in focus, the bank added. AUD/USD daily chart, Source: Author´s analysis, tradingview.com