Australian Dollar Rallies on Chinese Data

Australian Dollar Rallies on Chinese Data

The AUD/USD opened the Asian session at 1.0835 and immediately moved higher on the back of model fund buying and AUD/JPY demand. Stops in the AUD/JPY were triggered above 87.70 to a high of 87.95 while the AUD/USD moved up to 1.0773 at one stage. The AUD/USD lost some ground after Chinese data showed slightly higher than expected CPI while IP and retail sales came in a bit lower than expected. The AUD/USD traded down to 1.0836 before decent buying reemerged and it was trading around 1.0855 heading into the afternoon session. The market shrugged off the mixed data out of China, but analysts suggest the stubbornly high inflation numbers could see the PBOC step up tightening efforts, which has the potential to curb China”s economic growth. These concerns have the potential to undermine the trends higher in commodities and risk currencies such as the AUD. Sentiment towards the AUD/USD is bullish and a move towards 1.1000 may still be on the cards despite potential China concerns.

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