Summary:

• AUD the weakest G10 currency as trade balance disappoints
• Chinese PMI misses expectations
• AUDUSD moves lower, support at 0.7775

Asian session are very lively this week. Let us recall that we had the RBA decision on Tuesday, very weak employment data from New Zealand on Wednesday and there were two more interesting prints from Australia and China today. They both missed expectations and we can see a pressure on AUDUSD.

Trade balance in Australia remained positive at +856 million of Aussies but it was down from 2.02 billion in May and far below expectations at 1.8 billion. Exports was the main culprit at it slid 1% after a 9% gain in a preceding month with imports advancing 2%. That was quite a surprise – given higher industrial commodity prices traders could have expected a better reading and could be clearly disappointed.   

Australia enjoys a trade surplus given relatively high commodity prices but data for June has disappointed. Source: Macrobond, XTB Research 

The data from China was only a minor miss as the (Caixin) services PMI slid 0.1p to 51.5 points, 0.3 points lower than anticipated. Having said that, 3 out of 4 Chinese PMIs released this month (2 for industry, 2 for services) saw minor declines in a period where the PBOC seems to conduct a bit more supportive monetary policy again. This could suggest that authorities could find it hard to support current growth rates down the road and might find it necessary to lower their aims or risk even more serious crisis. 

AUDUSD could see a correction towards a previous resistance zone. Price action at this level could be crucial for this pair. Source: xStation5 

Moving on to AUDUSD, the pair crushed a strong 0.7750/75 resistance zone in July and moved even above 0.80 for a while. However, we have seen two pullbacks from above this level so far and given a deteriorating background a correction towards the 0.7775 (that now serves as a support) could be inevitable.