AUD to USD Forecast: China Economic Indicators, the Middle East, and Sub-$0.64

China: Q1 GDP, Industrial Production, and Retail Sales in Focus

On Tuesday, economic indicators from China will impact near-term trends for the AUD/USD. First quarter (Q1) GDP data, industrial production, retail sales, fixed asset investment, and unemployment warrant investor attention. The Q1 GDP, industrial production, and retail sales figures will likely impact the AUD/USD more.

Economists forecast the Chinese economy to expand 5.0% year-on-year after growing 5.2% in Q4. Sub-5% could fuel expectations of a fiscal stimulus package after Beijing set a growth forecast of 5% for 2024.

Forecasts for industrial production and retail sales also suggest weaker trends. Economists expect retail sales to advance 4.5% year-on-year in March after rising 5.5% in February. Moreover, economists predict industrial production to increase 5.4% year-on-year in March after advancing 7.0% in February.

The numbers from China are significant for the Aussie dollar and the Australian economy. One-third of Australian exports head to China. Australia has a trade-to-GDP ratio of over 50%, with 20% of the workforce in trade-related jobs. Weaker growth in China could impact trade terms, the Australian economy, and the Australian labor market.

US Economic Calendar: Housing Market Trends and Fed Speakers

On Tuesday, the US housing market will be in focus. Economists forecast building permits to decline by 0.7% in March after rising by 2.4% in February. Moreover, economists expect housing starts to fall by 0.8% after surging by 10.7% in February.

Economists consider the housing market a litmus test of the US economy.

Improving housing market conditions could signal uptrends in consumer confidence and spending. Consumer spending fuels demand-driven inflation. Notably, the Fed remains concerned about housing services inflation. Improving housing market conditions could bolster inflationary pressures and influence the Fed rate path.

Other stats include industrial production figures for March. An unexpected fall in production could test buyer demand for the US dollar. Economists forecast industrial production to increase by 0.2% in March.

Beyond the numbers, FOMC member commentary and news updates from the Middle East also need monitoring. Threats of an Israeli retaliation to the Saturday attack would drive buyer demand for the US dollar.

Short-Term Forecast

Near-term AUD/USD trends will hinge on the stats from China, stimulus chatter from Beijing, and news from the Middle East. Increasing geopolitical tensions in the Middle East would fuel a flight to the safety of the US dollar.

AUD/USD Price Action

Daily Chart

The AUD/USD remained comfortably below the 50-day and 200-day EMAs, affirming the bearish price signals.

An Aussie dollar break above the $0.64582 resistance level would support a move toward the 50-day EMA. However, the Aussie dollar must break down resistance at $0.65000 to target the 50-day EMA.

Updates from the Middle East, economic indicators from China, and the US economic calendar need investor attention.

Conversely, an AUD/USD fall through the $0.64 handle could bring the $0.62713 support level into view.

Given a 14-period Daily RSI reading of 38.31, the AUD/USD could drop below the $0.64 level before entering oversold territory.