Last week, the AUD/USD pair grew and reached the highest values since June in the area of 0.7135, but today the quotes corrected downwards against the background of weak Chinese data, which did not meet market forecasts and put pressure on commodities.
In July, the volume of production in China increased by 3.8%, falling short of the projected level of 4.6%, and retail sales – by 2.7% instead of the expected 5.0%. In general, the Chinese economy is under pressure, despite the exit from the coronavirus pandemic, which threatens to reduce the consumption of raw materials and losses for Australian exports. In these circumstances, investors' attention is focused on the further actions of the Reserve Bank of Australia (RBA). It is expected that it will continue to raise rates, but in what amount (25.0 or 50.0 basis percentage points) is still unclear. The situation will become clearer after the publication of the minutes of the last meeting of the RBA, which may contain hints on further actions of the regulator, and after the release of data on the index of wage changes for Q2. Probably, the indicator will be 2.7%, which will be the maximum since 2015 and may point out an acceleration of inflation. With the implementation of the forecasts, the RBA is likely to continue a sharp tightening of interest rates, increasing the risks of recession in the national economy.
The price is correcting downwards within the long-term descending channel, but in order to resume a serious decline, the quotes will have to consolidate below the 0.6958 mark (Murray [1/8], the middle line of the Bollinger Bands). In this case, the targets of the decline will be 0.6835 (Murray [0/8], Fibo retracement 50.0%) and 0.6714 (Murray [-1/8]). If the price reconsolidates above the 0.7080 level (Murray [2/8], Fibo retracement 38.2%) growth will be able to resume to 0.7202 (Murray [3/8]), 0.7324 (Murray [4/8]).
Technical indicators do not give a single signal: the Bollinger Bands are reversing upwards, the MACD histogram is increasing in the positive zone, and the Stochastic is reversing downwards in the overbought zone.
Resistance levels: 0.7080, 0.7202, 0.7324. | Support levels: 0.6958, 0.6835, 0.6713.