Another day, another massive leg lower in the US dollar as investors have been repricing the Fed’s hawkishness recently. As of writing, the AUD/USD pair traded more than 1% higher during the US session, jumping to 0.68 for the first time since the middle of September.
Focus on Chinese data
China’s October retail sales dramatically fell to -0.5% yearly from 1.0% expected and 2.5% from the previous month, while industrial production YoY came in at 5.0% from 5.2% expected and 6.3% from the previous month.
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Moreover, the Fixed Asset Investment YoY decreased to 5.8% in October, down from the 5.9% predicted and 5.9% in September.
China’s National Bureau of Statistics (NBS) issued a statement via Reuters after the publication of the October activity figures outlining their perspective on the economy.
- Covid flare-ups slow down the economy’s recovery.
- Will aggressively increase demand and maintain employment and price stability.
- Will strengthen the basis for economic recovery.
- Although the real estate market has improved a little, the negative trend has not changed.
Neutral RBA minutes
Moreover, the RBA minutes showed that the board does not rule out a pause or a return to 50 bps while the central bank is on no predetermined path; considering a 50 bps hike. Still, in November, it saw a stronger case for a 25 bps hike.
US inflation slowed further
Later in the day, traders paid attention to the US PPI numbers. The BLS stated that wholesale inflation in October not only slowed overall but also fell short of every expectation, with the highlight being the unchanged print in core PPI, which marked a significant decline from last month’s 0.2% gain and fell far short of the 0.3% forecast.
The headline PPI’s YoY growth of 8.0% was the smallest since July 2021—more than a year ago.
The index for retailing of fuels and lubricants, which decreased 7.7%, was a significant contributor to the fall in prices for final demand services in October, claims the research. The indices for long-distance motor carrying, partial auto retailing, and professional and commercial equipment wholesaling all decreased as well.
On the other hand, prices for hospital inpatient treatment rose by 0.8%. The indices for wholesale clothing, airline passenger services, and partial stock broking and dealing services all increased.
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The next line of resistance is expected near 0.69, where September highs are located, with the key long-term level for bears at the 200-day moving average near 0.6960.
AUD/USD daily chart, Source: Author´s analysis, tradingview.com
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