AUSTRALIAN DOLLAR TECHNICAL OUTLOOK – MIXED
- Australian Dollar closely watch the Chinese GDP report as economic activities increase
- 3rd Quarter earnings are critical to watch. Big brands include Chipotle, Netflix, and Tesla
- Rising coronavirus cases, the specter of the strict lockdown measures haunts the Australian dollar
CHINA Q3 GDP DATA, REPORTS OF RETAIL SALES
As the Australian largest trade partner, the Chinese economic report carries the premium and has the proclivity for emanating significant price rally from the AUD. YoY 3rd quarter GDP data is expected to start showing a 5.5% print, which is far higher as compared to the 3.2% previous figure. Also, in the year to date timeframe, the economists estimated a 0.7% growth report.
Also, the retail sales are expected to extensively beat the estimates that if they do will bolster the risk appetite, especially in the zone, and nudge the Australian Dollar higher alongside the regional currencies that largely depend on the vibrant Chinese growth. Monitoring the indicators will be vital, particularly because the Australian-China relations have worsened amidst the covid-19 pandemic.
EARNINGS DATA ON THE CARDS
During the week, the cascade of earnings data will start to floor the market and might stir more volatility. Some of the big names involved include Tesla, Halliburton, IBM, Chipotle, UBS, Netflix, Coca-Cola, and Lockheed Martin. Stocks such as Tesla and Netflix that have risen amidst the pandemic might outperform their major counterparts and add onto the double-digit returns from March.
COVID-19 CASES SOURING SENTIMENT, PROSPECTS OF GROWTH
Many countries have started to experience the 2nd wave of coronavirus cases, with countries like France reporting more than 30,000 covid-19 infections a day. Both London and Paris have said that they are going to impose stricter lockdown measures to halt the sudden rise. Incase other countries also experience the surge and impose the same measures; this will halt what was already a bumpy recovery.
With the growth-oriented currency, the Australian dollar will most likely suffer incase the demand for the iron ore, Australia’s biggest export, and key growth input declines. The IMF recently stated, “While the recovery in China has been faster than expected, the global economy’s long ascent back to pre-pandemic levels of activity remains prone to setbacks”.
With an economy that has been weakened by covid-19, markets seem predisposed to the violent volatility sessions, particularly incase the sources of uncertainty come from geopolitics, the notoriously indecisive risk. This may help describe why the upcoming US elections and continued fiscal stimulus negotiations are so crucial.