FxWirePro: AUD/USD erases early gains on mixed Chinese data dump, risk-on sentiment to keep downside limited

AUD/USD chart - Trading View 

AUD/USD was trading 0.15% higher on the day at 0.7087 at around 03:20 GMT, down from session highs at 0.7108.

The Australian dollar depressed after weaker-than-expected China GDP data. However, upbeat China Retail Sales and Industrial Production numbers overshadow dismal GDP data. 

China's quarter-on-quarter gross domestic product (GDP) came in at 2.7%  versus expectations for 3.2% and down from the second quarter's 11.5% reading. The annualized GDP printed at 4.9%, also missing the forecast of 5.2%. 

Data released earlier today showed consumer spending rose 3.3% year-on-year, beating the estimate of 1.8% growth by a big margin. Meanwhile, Industrial Production increased by 6.9% versus a forecast of 5.8%. 

The pair has snapped two days of downside and risk-on market sentiment is likely to keep downside limited.

Risk tone remains positive after US President Donald Trump said he wants the biggest stimulus than House Speaker Nancy Pelosi’s proposal.  Hopes of immediate stimulus favor the market optimists.

Technical studies for the pair are still bearish. Price action is consolidating below daily cloud. 110-EMA is immediate support at 0.7041. Break below will see downside resumption. On the flipside, breakout above daily cloud will negate any further bearishness.

Major Support Levels: 

S1: 0.7041 (110-EMA)

S2: 0.6963 (23.6% Fib)

S3: 0.6921 (55W EMA)

Major Resistance Levels: 

R1: 0.7098 (20W MA)

R2: 0.7114 (5-DMA)

R3: 0.7241 (200W MA)

Summary: Price action seems to have been caught between 55 and 110 EMAs. Sideways likely for a few sessions. Break below 110-EMA to see further downside. Retrace above cloud will negate the bearish bias.