The Australian dollar couldn’t rally despite impressive economic data from China

  • The Australian dollar couldn’t sustain early gains on Wednesday that were sparked by stronger-than-expected Chinese economic data.
  • Australia’s March jobs report will be released on Thursday.
  • There’s also a raft of major economic data scheduled in Europe and North America.

The Australian dollar remains stuck in a narrow trading range against the greenback, failing to break convincingly above the 72 cent level on Wednesday, despite the release of stronger-than-expected Chinese economic data.

Here’s the scoreboard at 7am in Sydney on Thursday.

AUD/USD 0.7177 , 0.0002 , 0.03%
AUD/JPY 80.44 , 0.09 , 0.11%
AUD/CNH 4.7920 , -0.024 , -0.50%
AUD/EUR 0.6352 , -0.0008 , -0.13%
AUD/GBP 0.5503 , 0.0005 , 0.09%
AUD/NZD 1.0667 , 0.0061 , 0.58%
AUD/CAD 0.9573 , -0.0004 , -0.04%

After initially falling in sympathy with the New Zealand dollar following the release of weak New Zealand Q1 CPI data early in the session, the AUD/USD reversed those losses following the release of Chinese economic data that topped market expectations.

China’s GDP grew by 6.4% from a year earlier in Q1, unchanged from the pace seen in the prior quarter, while industrial output and retail sales both accelerated sharply from the levels seen in the first two months of the year. Urban fixed asset investment grew at a faster pace than earlier in the year, bolstering confidence that the Chinese economy is strengthening on the back of recent stimulus measures rolled out by policymakers.

The data saw the AUD/USD lift to as high as .7206, coming within a whisker of hitting fresh multi-month highs.

However, having tried to break technical resistance above .7200 for several hours, buyers eventually gave up trying to push the Aussie higher, seeing it give back ground towards the close.

That move was helped by news that the US trade deficit narrowed to the lowest level in eight months in February, helping to boost expectations for US Q1 GDP in the process.

AUD/USD 4-Hour Chart

After being dominated by the release of Chinese economic data on Wednesday, the near-term fortunes of the Aussie will likely be determined by the release of Australia’s March jobs report on Thursday.

The median economist forecast looks for employment to increase by 15,000, a result that’s expected to see the unemployment rate edge up to 5%.

Given the RBA’s forecasts are underpinned by an expectation that labour market conditions will remain firm in the period ahead, the jobs report will be influential on near-term expectations for a RBA rate cut.

The jobs report will arrive at 11.30am AEST, the same time the National Australia Bank will release its quarterly Australian business confidence survey. Like jobs data, the RBA is paying close attention to changes in business conditions and confidence.

Outside of Australia, other data highlights include flash PMI reports from Japan, the Eurozone, and United States. UK and Canadian retail sales, along with jobless claims, retail sales and the Philadelphia Fed manufacturing index from the US are the other headline acts.

With many markets closing on Friday for Easter, trading volumes are likely to fall significantly, increasing the risk of whippy price action during the session.