We need to remember that Australian economy is very sensitive to local currency appreciation, as it hurts trade and tourism activity due to more expensive goods and services. Given China is one of the key trade partners of Australia, we need to monitor the reports out of PRC , as they may be a leading indicator of future demand on Australian export.
And today we saw Chinese trade data. Both export and import has slowed the growth hinting the possibility of weaker demand from Beijing. And this is the first signal AUD may come under pressure, if the trend is confirmed.
And here is the second signal – Australian trade minister Ciobo had a moan about the strong Australian dollar. It won’t take long when other officials join the camp, and then the aussie selloff will be unstoppable.
So, we are waiting for further depreciation of AUDUSD with nearest target at 0.79, giving the way to 0.7840 once it broken.