Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6460.
- Add a stop-loss at 0.6250.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 0.6300 and a take-profit at 0.6200.
- Add a stop-loss at 0.6400.
The AUD/USD price continued rebounding on Monday as the US dollar retreated and after the relatively strong Chinese economic data. It rose to a high of 0.6378, which was slightly higher than this month's low of 0.6200.
China economic resilient
The Chinese economy remained in a difficult place as the impact of the Covid-zero strategy and corporate deleveraging continued.
Data published by the National Bureau of Statistics (NBS) showed that the closely watched retail sales numbers declined from 5.4% to 2.5% in September. In the same period, the unemployment rate remained at 5.2% while the house price index (HPI) has been in a downward trend since 2021. The HPI dropped by 1.5% in September as concerns about the industry remain. In all, the economy expanded by 3.9% on a YoY basis.
Chinese economic numbers are important for Australia because of the vast volume of trade that exists between the two countries. China buys most of Australia's key products like iron ore, natural gas, coal, and gold. As a result, the Australian dollar is often seen as a proxy for the Chinese economy.
The AUD/USD price also tilted upwards after the latest Australian jobs numbers. According to the Bureau of Statistics, the unemployment rate remained at 3.5% in September as the economy added over 9k jobs. These numbers showed that the post-Covid job boom may be coming to an end.
The next key catalyst for the Australian dollar will be the upcoming quarterly consumer inflation data scheduled for Tuesday. Economists expect the data to show that the headline inflation rose from 6.1% in Q2 to 7.0% in Q3 as energy prices remained at an elevated level.
Despite the rising inflation, there are signs that the Reserve Bank of Australia (RBA) rate hikes have peaked. The bank hiked rates by just 0.25% in October. It aims to continue hiking by 0.25% in the next few months.
The AUD/USD pair will also react to the latest Australian budget scheduled on Tuesday. The budget will forecast that the economy will grow by 3.25% in this fiscal year and by 1.5% in 2023 to 2024.
AUD/USD forecast
The AUD/USD price rose to a high of 0.6381, which was the highest point since October 7. As it rose, the pair moved above the important resistance point at 0.6356, which was the highest point since October 20th.
The pair moved above the 25-day moving average and the first resistance of the standard pivot point level. At the Relative Strength Index (RSI) moved close to the overbought level. The pair will likely keep rising as bulls target the second resistance at 0.6460.
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