AUD/USD Daily Forecast: Analyzing the Impact of China’s Inflation Data

China’s Inflation Figures and AUD/USD Impact

On Monday, September 9, inflation figures from China will influence buyer demand for the AUD/USD pair. Economists expect the annual inflation rate to increase from 0.5% in July to 0.7% in August. An upward trend in consumer price inflation could signal an improving demand environment, possibly boosting the Australian dollar.

China accounts for one-third of Australian exports, with 20% of the Aussie workforce in trade-related jobs. Increased demand from China could boost the Australian economy, which has a trade-to-GDP ratio of over 50%.

Producer Price Trends and Investor Sentiment

Beyond headline inflation, investors should also consider producer price trends. A larger-than-expected decline in producer prices could signal a softer outlook for consumer prices, possibly countering the effects of headline inflation on the Aussie dollar. Economists expect producer prices to fall by 1.4% year-on-year in August after declining by 0.8% in July.

Monetary Policy Outlook from China and the US

The inflation numbers from China will put the People’s Bank of China under the spotlight. A weak demand outlook could raise expectations of further policy support to bolster the Chinese economy. Natixis Asia Pacific Chief Economist Alicia Garcia-Herrero remarked on the PBoC’s options, stating, “The PBoC will have to ease again cutting reserve requirements (RRR). The problem is that the risk of a liquidity trap is only growing. If China ends up there, rate cuts will no longer work.”

Impact of US Consumer Inflation Expectations

Later in the Monday session, consumer inflation expectation figures could influence US dollar demand. Economists forecast consumer inflation expectations to remain steady at 3.0% in August. Softer-than-expected figures could fuel investor bets on a 50-basis point September Fed rate cut.

Looking ahead, near-term AUD/USD trends will hinge on crucial data releases from China and US inflation numbers. Weaker-than-expected stats from China could signal a waning demand environment, possibly pushing the AUD/USD below $0.66. Conversely, lower-than-expected US inflation numbers could counter the effects of data from China. Support for a 50-basis-point September Fed rate cut may push the AUD/USD toward $0.67.

AUD/USD Price Action Analysis

The AUD/USD sat below the 50-day EMA while remaining above the 200-day EMA, sending bearish near-term but bullish longer-term price signals. A break above the 50-day EMA could signal a move toward the $0.67003 resistance level. Furthermore, a breakout from the $0.67003 resistance level may give the bulls a run at the $0.67500 level.

Conversely, a drop below $0.66500 would bring the top trend line into play. A fall through the top trend line could give the bears a run at the 200-day EMA and sub-$0.66 levels.

Investors should consider the inflation numbers from China, the US economic calendar, and central bank commentary. Stay updated with our latest views and analysis to manage exposures to the forex markets.

Stay Informed on AUD/USD Trends

Monitor the real-time data, news updates, and expert commentary to adjust your trading strategies. The evolving dynamics of inflation data will be crucial for AUD/USD movement.