AUD/USD appeared headed for a deeper retreat after RBA minutes mentioned the possibility of rate cuts, but price action since the initial dive has favored bulls nL1N21Y0DU ahead of key China data.
Equity market rallies, buoyant commodity prices and a drop in Australian 3-month bank bill prices YBAU9 helped rally AUD/USD away from the 10-DMA and increase the odds for breaks of the 200-DMA and Feb. 21 high.
Upbeat results from key China economic data is needed if the rally is to extend.
China's March industrial output CNIO=ECI and retail sales CNRSL=ECI, both of which are expected to improve, as well as Q1 GDP CNGDP=ECI will get close scrutiny from investors to see if stimulus measures in China are leading to stabilized or improved growth. Upbeat data results are likely to see investors flock to risk-sensitive assets such as emerging market currencies, especially China's yuan, and high beta currencies like the aussie.
Solid results would also ease some RBA concerns about bearish external factors, which would likely result in gains for Australian interest rates.
Reductions of net-short aussie positions, which remain elevated nL1N21U1IM, would likely accelerate, which could lead to a break above 0.7205/10 resistance.
Bulls would then target the 0.7295 2019 high followed by December and August 2018 highs.
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