The Australian dollar is looking perky as traders await China's latest economic report card

Suhaimi Abdullah / Getty Images

The Australian dollar is looking perky this morning ahead of key Chinese economic data, including September quarter GDP, that will be released later in the session.

At .7663, the AUD/USD currently sits at the highest level seen since October 4.

It briefly traded at .7689 in European trade, a move that followed the release of robust Chinese monetary growth figures for September.

Coincidentally, the AUD/USD rally stalled at a key technical resistance level running from the highs seen earlier this year.

AUD/USD Hourly Chart

A combination of lower US bond yields and a weaker US dollar, partially as a result of a weaker core consumer price inflation released in the US overnight, helped to underpin the Aussie’s rally overnight, building upon the gains seen in Asian trade.

Optimism towards upcoming Chinese economic data — spurred on by not only the lending data released overnight but also data released earlier this month — was another factor that no doubt contributed to its strength.

And that takes us to today’s session where China’s data dump will dominate financial markets, especially the Australian dollar.

Come 1pm AEDT, Q3 GDP, along with retail sales, industrial output and urban fixed asset investment figures for September, are scheduled for release.

“We think China’s economy grew at an annual pace of 6.7%, with an upside risk of 6.8%,” said Elias Haddad, senior currency strategist at the Commonwealth Bank.

Haddad notes that “since Q1 2013, annual Chinese GDP growth has outperformed the market consensus 8 times, undershot the market expectation 2 times and on 4 other occasions the data matched the consensus”.

Since the start of 2015, the GDP figure has always matched or beaten economist estimates, something that along with a series of data beats in recent months underlines why so many think that the risks today are for a higher–than-expected figure.

Hadda believes that “stronger Chinese economic activity can push commodity prices higher and further underpin AUD, particularly on the major cross rates”, with the exclusion of the New Zealand dollar.

While strong Chinese data is almost always supportive of the Australian dollar, one has to question just how much this is already built into the Aussie already, particularly as the AUD/USD has already rallied 2.2% from the lows seen last week.

We’ll find out that answer after 1pm AEDT, but there’s clearly a risk that a “buy the rumour, sell the fact” scenario could prevail.

Outside of the China data, the Aussie is also likely to take its cues from movements in the USD/CNY, particularly around the People’s Bank of China’s fix at 12.15pm AEDT.

Later in the session, the Aussie is likely to be influenced by the release of the US Federal Reserve’s Beige Book early tomorrow morning, along with a series of Fed speakers.

Here’s the Aussie dollar scoreboard as at 7.45am AEDT.

  • AUD/USD 0.7663 , 0.0038 , 0.50%
  • AUD/JPY 79.56 , 0.34 , 0.43%
  • AUD/CNH 5.1659 , 0.0225 , 0.44%
  • AUD/EUR 0.6980 , 0.0049 , 0.71%
  • AUD/GBP 0.6232 , -0.0025 , -0.40%
  • AUD/NZD 1.0643 , -0.0036 , -0.34%

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