Trading The Chinese GDP: AUD/USD Analysis

Tradervox.com (Dublin) - The Chinese Gross Domestic Product is a measurement of the production and growth of the economy, and analysts consider GDP one of the major indicators of economic activities for the South Pacific currency. A reading which is higher than the market expects is bullish for the Australian dollar.

The GDP data is released quarterly providing an excellent indication of the health and direction of the Chinese economy. The Australian dollar is sensitive to key Chinese data such as GDP , as China is Australia’s number one trading partner, so an unexpected reading can have a major impact on the direction of AUD/USD.

Chinese GDP growth is very high in comparison with the industrialized countries. However, the indicator has been falling in recent readings. GDP in Q2 fell to 7.5%, which was short of the estimate of 7.7%. The markets are expecting a turnaround in Q3, with an estimate of a 7.8% gain.

The Aussie has had a solid week and received a boost from hawkish RBA minutes. However, the crisis in Washington is still not resolved, and risky assets like the Australian dollar could get hurt if investors opt to stick with the safe-haven US dollar. Thus, the overall sentiment is neutral on AUD/USD towards this release. Technical levels, from top to bottom: 97.51, 96.70, 95.56, 94.28, 92.83 and 91.80.

If the reading is within the market expectations; that is from 7.6 to 8.0 percent, the AUD/USD is likely to rise within range with a small chance of breaking higher. If it is above expectation; between 8.0 and 8.3 percent, this will push the pair above one resistance level. But if it is well above expectation; above 8.3 percent, the pair will likely break two resistance levels. However, this last scenario is highly unlikely.

If the reading is below expectation, the opposite will occur. For reading between 7.2 and 7.5 percent, the pair is expected to move one support level down. However, for well below expectation reading, the pair may crash two support levels.

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