AUD/USD exhibits minimal movement following China’s August Trade Balance, which registered at $119.09 billion, closely aligning with the anticipated figure of $119.1 billion. The Westpac Consumer Confidence index experienced a decline of 5.2% in September, following a notable increase of 6% in August. The US Dollar may discover support as expectations for a Federal Reserve rate hike increase in September. AUD/USD halts its four-day winning streak, trading around 0.7210 during Asian hours on Tuesday. The pair maintains its position in the wake of the release of Trade Balance data from China, a key trading partner for Australia. China’s Trade Balance, measured in US Dollar terms, reached $119.09 billion for August, closely aligning with the estimates of $119.1 billion, and surpassing the July figure of $112.5 billion. Exports experienced a robust increase of 25% year-over-year in August, aligning with expectations and surpassing the prior figure of 23.9%. The country’s imports increased by 28.2% year-on-year during the same period, falling short of the anticipated 30% growth.
In July, imports experienced a growth of 27.5%. However, the AUD/USD pair depreciated as the Australian Dollar faced pressure from a sharp decline in domestic consumer sentiment. The Westpac Consumer Confidence index experienced a decline of 5.2%, settling at 84.4 in September, thereby reversing the 6% increase observed in August, which had reached 88.9. Matthew Hassan, Westpac’s Head of Australian Macro-Forecasting, emphasised that a downturn in the housing market is progressively impacting homeowner sentiment. Nearly two-thirds of consumers now expect an increase in mortgage rates, while escalating job insecurity, especially among those in construction and hospitality sectors, persists in undermining confidence. However, further losses for the AUD/USD pair may be limited by broad-based weakness in the US Dollar. HSBC added a note of caution to the recent stabilisation in the Dollar, warning that broader structural issues have not disappeared. Analysts at the bank stress that they “remain cautious about broader structural concerns, especially around US fiscal sustainability,” and caution that these worries “could still return and weigh on the dollar yet again” even if near-term sentiment has improved.
Despite its recent decline, the Greenback may discover support as market participants anticipate a probability exceeding 60% for a Federal Reserve rate hike in September. This shift follows a stronger-than-expected August US jobs report, which indicated that Nonfarm Payrolls added 162,000 jobs while the Unemployment Rate remained steady. Attention is now directed toward the forthcoming US Producer Price Index and Consumer Price Index inflation reports scheduled for release later this week, which may provide additional insights into monetary policy. In the daily chart, AUD/USD is positioned at 0.7210, sustaining a positive bullish outlook as it remains above the nine- and 50-day Exponential Moving Averages. This configuration, with price positioned above short- and medium-term trend measures, indicates that buyers are still in control.
The 14-day Relative Strength Index around 66 suggests solid, yet not excessive, upside momentum, implying potential for additional gains before reaching overbought conditions. On the downside, initial support is observed at the nine-day EMA near 0.7187, with further demand anticipated around the 50-day EMA at 0.7094 should a more significant pullback occur. Below, more distant structural floors align at 0.6688, 0.6434, and 0.6348—levels that would only become relevant should the current bullish structure unwind significantly.
