AUD/USD, ASX 200, HANG SENG INDEX OUTLOOK:
- The AUD/USD is steady at 0.729 on Monday. China import/export data may potentially spike volatility
- Australia’s ASX 200 index may extend losses for a third day, testing support at 5,820
- Hong Kong’s Hang Seng attempts to find support at 24,500. US markets are shut for the Labor Day.
The Australian Dollar traders will eye closely the China Balance of Trade data to be released at 11am Singapore time for clues of the demand for goods from the world’s second largest economy. The data will likely have an impact on the Australian Dollar, which exhibits historic correlation with Chinese data due to the economic link between the two countries.
Market forecasts a 7.5% growth in exports and a 0.2% increase in imports from a year ago. A better-than-expected reading will likely boost the commodity-linked currency, whereas disappointing figures will likely do the reverse.
As the US markets are shut for the Labor Day holiday, Asia Pacific currencies may experience a lower liquidity trading session, which renders the currencies vulnerable to surprises and events. Market volatilityand movements may be exacerbated due to lack of participants.
China Export vs. Import Trade USD YoY – September (Forecast)
Source: Bloomberg, DailyFX
Technically,the AUD/USD has retraced back to its 20-Day Simple Moving Average (SMA) line after hitting the upper bound of its Bollinger Band last week. The 20-Day SMA, which is now at 0.7253, may serve as an immediate support level for now. The overall trend remains bullish as suggested by the other two SMAs – the 50-day and 100-Day. A strong resistance level can be observed at 0.7390 – the 200% Fibonacci extension level. It may require a lot of positive catalyst and upward momentum to break above the 0.7390 resistance.
AUD/USD – Daily Chart
ASX 200 Index Outlook:
Australia’s ASX 200 index is set to open mildly lower following last Friday’s 3% decline. The US stock futures are falling at Asia opening hours and thus may weigh on the broad sentiment. Nonetheless, the release of China August trade balance figures later will help to paint clearer picture for the rest of the day.
Technically, the ASX 200 index has found an immediate support level at 5,820 – having it tested twice last week. However, the index has likely broken down an “Ascending Triangle” last week and thus has opened room for more downsides towards the next key support level at 5,770 – the 23.6% Fibonacci retracement. The MACD indicator has turned sharply lower, suggesting that bear side is having control.
ASX 200 Index – Daily Chart
Hang Seng Index Outlook:
Hong Kong’s Hang Seng Index may attempt to find some support at around 24,500 after two bloodbath trading sessions last week. Alibaba (9988 HK) and Xiaomi (1810 HK) are added into the Hang Seng Index with effect from 9th Sep. This will significantly increase the ‘tech’ weight of the stock benchmark.
Technically, the Hang Seng Index has likely broken down an “Ascending Triangle” formed since early August. The MACD indicator has turned firmly bearish despite that it may consolidate at around 24,500 first before finding a clear direction. How US stock markets behave this week will have a significant impact on Asian stock indices.
Hang Seng Index – Daily Chart
Recommended by Margaret Yang, CFA
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— Written by Margaret Yang, Strategist for DailyFX.com
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