China, the world’s second-largest economy, has released another set of disappointing trade data. Australia’s No. 1 trade partner had a drop of 4.4% in exports year over year in July. A slide of 3.5% was expected, but at least it is better than 4.8% seen beforehand.
The more disappointing data point for Australia is a deep dive in imports: 12.5% y/y against 7% expected and 8.4% previously. Australia exports iron ore and other metals to China. The fall does not bode well for Australia’s mining sector.
The Chinese economy is transitioning away from industry and investment towards consumption and services. However, this is a long process. Also, Australia is moving away from its reliance on extracting metals and the big client to other industries, and also here, the shift is gradual.
Nevertheless, the Chinese publication did not seem to hurt the Aussie too much. AUD/USD did wobble in range but did not fall. Perhaps the impact of China on Australia is waning. The RBA cut interest rates but signalled that no new moves are coming in the near future. We still have more data coming out from China this week, namely industrial output.
Aussie/USD is currently trading at 0.7628, moving up within the range.Support awaits at 0.76 and resistance at 0.7640. A further cap awaits at 0.7660.
More:Â Elliott Wave Analysis on AUDUSD and GBPUSD
Here is the AUD/USD chart.
