Australian dollar rises after strong China industrial profits data
The Australian dollar rose slightly as investors reacted to the disappointing data from Australia and China. In Australia, data from the statistics bureau showed that building capital expenditure dropped by 4.4% in the second quarter. That was a worse decline than in the first quarter’s decline of 1.1%. Building capital expenditure declined by 7.6% while private new capital expenditure fell by 5.9%. Other data from China showed that industrial profits rose by 19.6% in July after rising by 11.50% in June. The profits declined by 8.1% from January to July.
The US dollar index dropped during the Asian session as investors await an important speech by Federal Reserve chair at the Jackson Hole summit. In the speech, Jerome Powell will talk about the state of the American economy and possibly reveal the bank’s plans to support the economy. The speech will come a day after the US released strong new home sales data. It will also come a few hours after the second reading of Q2 GDP data. Analysts expect that the data will show that the economy contracted by 32.5% in the second quarter after contracting by 5.0% in the first quarter. Also, we will receive the initial and continuing jobless claims numbers.
The economic calendar will have some important data from Europe today. In Switzerland, the Federal Office of Statistics will release the second quarter GDP data. Analysts expect the data to show that the economy contracted by 9.6% and 8.6% on a year-on-year basis and quarter-on-quarter basis, respectively. This is after the economy weakened by 1.3% and 2.6% in the first quarter. In Sweden, the statistics bureau will release retail sales, manufacturing confidence, and trade data. Meanwhile, in Italy, the statistics office will release the Italian industrial sales numbers.
The EUR/USD pair is trading at 1.1831, which is slightly above yesterday’s low of 1.1770. On the daily chart, the pair is still above the 50-day and 100-day exponential moving averages. The Average True Range (ATR) has also declined, which is a sign of low volatility. Meanwhile, the pair is in consolidation, as shown by the white rectangle. Therefore, the pair is likely to remain calm during the European session as traders wait for news from the Fed.
The AUD/USD pair was little changed after the mixed data from Australia and China. It is trading at 0.7235, which is slightly above the 50-day and 100-day EMAs on the four-hour chart. The price is also slightly below the YTD high of 0.7280. The signal and main line of the MACD and the force index have moved above the neutral line. Therefore, the pair is likely to remain within the current range ahead of Jerome Powell’s speech.
The USD/CHF pair is little changed and is trading at 0.9078, which is slightly above this month’s low of 0.9010. On the daily chart, the price is below the short and longer-term moving averages. The signal and main line of the MACD have started moving upwards while the Average True Range (ATR) has been falling. Therefore, the pair is likely to continue falling as bears target the next level at 0.9050.