AUDUSD retracted on poor economic data out of China that indicated a massive 18.1 percent decline in exports in February from a year earlier. Economists were looking for an increase of 7.5 percent, while imports did rise 10.1 percent. This resulted in a $23 billion trade deficit, the largest in over two years.
Continued worry of a China slowdown is weight on the Aussie dollar, which fluctuates with such data. Risk sentiment is slightly negative heading into the US trading session, although equity futures are off session lows. A continuation of data erosion will put pressure on Chinese Primeir Li Keqiang’s growth target of 7.5 percent, although he has sad Chinese data is more of a “guideline.” “There is an intrinsic inconsistency in their policy target and the reality of the economy,” said Liu Li-Gang, head of Greater China economics at Australia & New Zealand Banking Group Ltd.
The AUDUSD has been range bound, but price action is beginning to pressure support at .9030. A 10-day, 4H chart shows price action trading below a minor ascending trend line and could dictate today’s direction.
A low-to-high Fibonacci retracement shows additional support at .9010, or the 50 percent retracement level. Resistance can be found at .9060 and .9074.
There is little economic data until tonight’s NAB business sentiment data. Price action is likely to remain within range until the sentiment data is reported, which will test either price bands.