Recently, Nataxis Asia Pacific Chief Economist Alicia Garcia Herrero expressed disappointment in China’s industrial policies following the Third Plenum. She noted a lack of significant change in direction towards consumption-led growth or market forces.
Economists are predicting an increase in the Chicago Fed National Activity Index from 0.18 in May to 0.30 in June. This index evaluates economic activity and inflation environments. A higher-than-expected CFNAI could positively impact US investors’ confidence in a soft landing for the economy.
Investors are eagerly awaiting the release of the CFNAI data as well as the Q2 GDP numbers on July 25. While the CFNAI may not directly influence expectations of multiple 2024 Fed rate cuts, it could impact short-term market sentiment. The US Services PMI and the Personal Income and Outlays Report will play crucial roles in shaping the Fed’s rate path.
The AUD/USD pair’s performance is closely tied to these economic indicators. A stronger CFNAI result could lead to selling pressure on the Australian dollar, while a pickup in Australia’s service sector activity could raise expectations of an RBA rate hike. On the other hand, weaker US economic data could solidify anticipated Fed rate cuts, impacting the exchange rate.
The AUD/USD pair currently sits above the 50-day and 200-day EMAs, indicating a bullish trend. Breaking above the $0.67003 resistance level could lead to further gains towards $0.67500 and potentially $0.67967. However, a drop below key support levels could signal a reversal towards the 200-day EMA.
As global economic indicators continue to drive market sentiment, investors must stay informed and adapt their trading strategies accordingly. With a focus on China’s policies, US economic data, and technical analysis of the AUD/USD pair, traders can navigate the forex markets effectively. Stay alert to real-time data updates and expert opinions to make informed decisions in a dynamic trading environment.