Australian Dollar jumped further today, particularly in cross rates, as risk appetite in China improved. The move was fueled by gains in Chinese equities after inflation data suggested room for further stimulus, with Hong Kong’s Hang Seng Index climbing to a four-year high.
The -0.4% yoy decline in China’s highlighted weak domestic demand and strengthened the case for the PBoC to cut borrowing costs. Producer prices also stayed in deflation, highlighting the pressures on manufacturers. More importantly, the Fed’s shift toward easing to reduce pressure on Yuan exchange rate, giving the PBoC greater latitude to stimulate without sparking destabilizing outflows.
Technically, Hong Kong’s HSI remains in a steady uptrend, with D MACD showing signs of momentum returning. For now, outlook will stay bullish as long as 25013.26 support holds. Current up trend should be on track to 161.8% projection of 14597.31 to 22770.85 from 14794.16 at 27905.69, which is close to 28000 psychological level.
AUD/JPY is now pressing 97.41 key resistance. Further rise is expected as long as 96.29 support holds. Sustained trading above 97.41 will pave the way to 38.2% projection of 86.03 to 97.41 from 94.38 at 98.72, and then 61.8% projection at 101.41.
AUD/CAD’s rally continues today and broke through 0.9218 structural resistance. Current up trend should target 61.8% projection of 0.8440 to 0.9041 from 0.8902 at 0.9273.
GBP/AUD also edges lower today and near term outlook remains bearish for 61.8% projection of 2.1643 to 2.0478 from 2.1003 at 2.0283 next.
