China will release its trade balance data for October on Friday at 03:00 GMT, according to the General Administration of Customs. Analysts expect the trade balance to rise to $95.60 billion from $90.45 billion last month, with exports and imports anticipated to increase by 3% and 3.2%, respectively. This trade data can impact the Forex market because of China’s significant economic influence. The AUD/USD has gained value as the US Dollar weakens after reports showed a soft US labor market, leading to expectations of interest rate cuts.

AUD Resistance and Support Levels

If the trade balance exceeds expectations, it may boost the Australian Dollar. Key resistance levels will be at the 100-day EMA of 0.6525, then at 0.6560 and 0.6620. If the trade balance falls short, support could be at 0.6472, with further declines possibly reaching 0.6424 and 0.6400. The Australian Dollar is affected by factors such as interest rates from the Reserve Bank of Australia, Iron Ore prices, and the performance of the Chinese economy. A positive trade balance will strengthen the AUD, while a negative one could weaken it. China’s economic health directly impacts the AUD, as strong demand from China for Australian exports raises the currency’s value. Additionally, rising Iron Ore prices help boost Australia’s trade balance and support the AUD.

Recent Trade Data and Implications

Now that the Chinese trade balance data for October has been released, we were looking for a surplus around $95.60 billion. This figure is vital for understanding global economic health. A strong result typically strengthens the Australian Dollar, which has already been gaining due to recent weaknesses in the US labor market and increased speculation about a Federal Reserve rate cut. If the trade data exceeds expectations, it supports a bullish outlook for the AUD/USD in the coming weeks. Derivative traders may consider call options or long futures contracts, targeting the initial resistance at 0.6525. If the price stays above this level, we could see quick movements towards the previous highs at 0.6560 and 0.6620. On the other hand, if the trade surplus is disappointing, it could raise concerns about slowing global demand, putting downward pressure on the Australian Dollar. In this case, buying put options or initiating short positions could be a smart move, with the 0.6472 low as the first target. Continuous weakness might push the AUD towards the psychological level of 0.6400. This data release is crucial as we reflect on the economic trends of 2024. Last year, China’s export growth was uneven due to a slow global recovery. Throughout 2024, industrial output figures stayed around 5-6% year-over-year, showing resilience yet lacking the substantial growth seen in previous cycles. A strong trade figure today suggests that robust demand is finally emerging. We should also note the price of iron ore, Australia’s top export, which has supported the currency. Despite challenges in China’s property sector, iron ore prices have remained steady, holding above $110 per tonne for most of the last year. A positive surprise in China’s trade data would strengthen demand for industrial commodities and could further boost the AUD/USD. Create your live VT Markets account and start trading now.

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