- AUDUSD Heading Towards 0.7385 Support Level
The Australian dollar continued its downward trend following series of weak economic data and fall in global copper price.
The gross domestic product number released on Wednesday showed the economy expanded 0.6 percent in the third quarter, less than experts projected and reinforced the impact of high foreign exchange rate on economic activities as stated by the Reserve Bank of Australia in September.
Accordingly, rising household debt amid strong job creation and sluggish wage growth continued to weigh on consumer buying power and retail sales, suggesting that while Christmas shopping may boost sales, sustainability will remain key issue in the first quarter of 2018. This is because consumers are likely to exhaust savings amid rising household debt, and force retailers to resume price war in order to boost sales.
Also, with China planning to cut credit facility and reduce steel importation to curb extreme pollution. The economic outlook is likely to remain weak for the first half of 2018 and revamp towards the third quarter on lower exchange rate, especially as businesses and investors tend to invest more at a lower rate.
Since AUDUSD sell opportunity was first mentioned in September, this pair has dropped 574 pips to 0.7506 supports. Hitting all our three targets and on course for the fourth target. However, with the weaker than expected Australian economic data, this AUDUSD is likely to extend its bearish move below the ascending channel. Therefore, a close below the channel should increase sellers’ interest of the pair towards 0.7385 supports as shown above.
Again, while the US economic data remain strong, the uncertainties surrounding the economy due to Russian investigation and geopolitical tension, especially after Trump recognized Jerusalem may disrupt AUDUSD outlook temporarily.