The AUD/USD price moved sideways in the Australian session as investors reacted to the ongoing reopening of the Chinese market. It was trading at 0.6745, which was slightly higher than last week’s low of 0.6630.

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China reopening to boost growth

The biggest news this week was the decision by China to scrap its quarantine measures for inbound flights even as the number of COVID cases rose. The country will remove these quarantine requirements on January 8. In a statement, the National Health Commission cited the fact that most Omicron cases were mild or asymptomatic.

China has been the most aggressive country in terms of COVID measures. While most countries have managed to live with the virus, China has maintained an aggressive policy. It required international arrivals to quarantine for five days at a hotel followed by 5 three days at home.

As a result, analysts expect that Chinese economic growth will lag behind those of other Southeast Asian countries for the first time in decades. Therefore, analysts expect that a reopened China will be a key growth engine for 2023.

Australia’s economy reacts positively to activities in China because of the large trade volume that exists between the two countries. Despite their trade war, Australia's exports to China grew to $116 billion in 2021.

The AUD/USD price reacted mildly to the latest US housing data. Numbers revealed that US house prices dropped for four straight months as mortgage rates remained high. The closely watched CoreLogic Case-Schiller National Hom Price Index dropped by 0.5% in October. I rose by 9.2% year-on-year, down from the previous 10.7%.

Economists expect that house prices will continue falling in the coming months as low demand intersects with rising housing inventories. The US will publish the latest pending home sales data on Wednesday. Its impact on the AUD/USD will be a bit limited.

AUD/USD forecast

The four-hour chart shows that the AUD/USD pair has been moving sideways in the past few days. It has remained below the lower side of the ascending channel. The pair is also between the upper and middle lines of the Bollinger Bands. Meanwhile, the MACD has moved above the neutral point. It has formed a break and retest pattern.

Therefore, the outlook of the pair remains bearish, with the next key level to watch being at 0.6600. The stop-loss for this trade will be at 0.6900.

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