All Eyes On Aussie Dollar During Easter Week

With China’s Q1 GDP forecast within government range and RBA meeting minutes to reiterate central bank’s wait stance, AUD/USD could rise higher.

This week will be a short week, with major financial markets closing on Friday for the start of the Easter holidays. We usually see a burst of activity in the first three days of Easter week followed by consolidation. However, with major data releases on Thursday from Australia, volatility could extend till Thursday. 

China’s Q1 GDP is expected to slow to 1.4% q/q and 6.3% y/y 

China’s economy is forecasted to have cooled in Q1 according to an AFP survey of analysts. Coming in at 6.3% y/y, this would mark the slowest pace of quarterly growth in almost three decades. However, the figure is still well within the range target by the government of 6.0% to 6.5% for 2019, downgraded from 6.6% last year. 

China has undertaken measures in recent months to combat the tepid global demand by announcing massive tax cuts and other fees reduction to help struggling companies. Last month Premier Li Keqiang acknowledged "downward pressure" but vowed not to let the economy "slip out of a reasonable range." We feel that growth could pick up once the fiscal policies translate into greater economic activity in the near future. This could cause Aussie dollar to rise as China is Australia’s biggest trading partner, so yuan and Aussie dollar are correlated.  

US-China trade talks closing in on a deal

After nine rounds of high-level talks between the world’s two biggest economies, all signs are pointing towards a possible resolution. US Treasury Secretary Steven Mnuchin said Wednesday, “We’ve pretty much agreed on the enforcement mechanism," which is a good sign of a breakthrough in trade talks. However, no date has been set for President Trump and President Xi to meet for a deal signing. A closure in trade tensions between the two economic giants could increase risk sentiment and push Aussie dollar higher.

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