The Australian dollar advances slightly as China’s GDP increases in the second quarter

• The Australian dollar advances after the publication of China’s key economic data.
• China Q2 GDP grew by 5.2% year -on -year, compared to the expected increase of 5.1%.
• Trump has warned that “very severe” tariffs will impose to Russia if a peace agreement is not reached in 50 days.

The Australian dollar (AUD) gains ground against the US dollar (USD) on Tuesday, after China’s economic data. In its closest commercial partner, China, the economy expanded at an annual rate of 5.2% in the second quarter, compared to a growth of 5.4% in the first quarter and the expected growth of 5.1%. Meanwhile, the Gross Domestic Product rate (GDP) of China increased 1.1% in Q2, compared to the market consensus of a 0.9% increase. In addition, retail sales increased 4.8% year -on -year in June, compared to 5.6% expected and 6.4% previous, while industrial production stood at 6.8%, compared to 5.6% expected.

The Aud/USD torque could face challenges since the US dollar could recover land amid renewed geopolitical concerns. The US president, Donald Trump, has threatened to impose “very severe” tariffs on Russia if a peace agreement is not reached in 50 days. Trump also warned of tariffs secondary to countries that import Russian oil. Operators expect GDP data, industrial production and retail sales of China Q2 later in the day.

The Westpac consumer’s confidence in Australia rose 0.6% intermensual in July, after an increase of 0.5% in June. Although the mood improved slightly, the last result stressed a clear disappointment after the Bank of the Australian Reserve (RBA) unexpectedly kept the rates without changes in its July meeting.

The RBA could keep interest rates at its next August meeting to direct inflation towards a sustainable return to the 2.5%target. The governor of the RBA, Michele Bullock, declared that the risks of inflation persist, citing the high unit labor costs and the weak productivity as factors that could boost inflation above the current projections. Meanwhile, the Vice Governor of the RBA, Andrew Hauser, highlighted the growing global economic uncertainty and warned that the impact of tariffs on the world economy could be significant.

The Australian dollar advances while the US dollar maintains losses before the CPI data

• The US dollar index (DXY), which measures the value of the US dollar compared to six main currencies, maintains losses around 98.10 at the time of writing. Investors are likely to wait for the June consumer price index (CPI) on Tuesday to obtain a new impulse on the monetary perspective of the Federal Reserve (Fed).
• President Trump, together with the NATO general secretary, Mark Rutte, confirmed that European allies will buy weapons made in the US for billions of dollars, such as Patriot missile systems. These weapons will be transferred to Ukraine in the coming weeks to deal with intensified Russian attacks.
• The US government immediately imposed on Monday a 17% tariff to most of the imports of fresh tomatoes in Mexico after negotiations ended without an agreement to avoid the tariff. Trump announced, on Saturday, a 30% tariff to imports from the European Union (EU) and Mexico as of August 1. He also proposed a general tariff rate of 15%-20%to other commercial partners, an increase with respect to the current base rate of 10%. In response, the European Union announced on Sunday that it will extend its pause in retaliation measures against US tariffs until early August, hoping to reach a negotiated agreement.
• Chicago Fed President Austan Goolsbee declared that commercial policy in the hands of Trump’s constant tariff threats could hinder the Fed’s ability to make rates cuts that both the market in general and Trump himself want to see.
• The US government registered a budget surplus of 27,000 million dollars in June, promoted by an increase in customs rights revenue, which reached a record of 27.2 billion dollars. This increase in tariff collection, which comes largely from policies introduced during the Trump administration, contributed to a 13% increase in total budget revenues, which amounted to 526,000 million dollars. Meanwhile, federal expenditure decreased 7% to 499,000 million dollars.
• The minutes of the Federal Open Market Committee (FOMC) of the June 17-18 meeting, published last week, indicated that mostly responsible for policies maintained a waiting position regarding future decisions about interest rates.
• The Commercial Balance of China reached CNY585.96 billion in June, reducing from the previous figure of CNY743.56 billion. Chinese exports increased by 7.2% year -on -year in June, after 6.3% in April. Meanwhile, imports increased a 2.3% year -on -year in the same period, recovering from an earlier fall of 2.1%.
• A Chinese customs spokesman declared that China exports will continue to advance in the next stage despite the challenges. It is important to note that China’s economic data could impact the AU, since China is an important commercial partner for Australia.
• The Reuters survey showed that 30 analysts predicted that the Bank of the Australian Reserve will cut the interest rate at 25 basic points to 3.60% in August. The four main banks of Australia, Anz, CBA, NAB and Westpac, also support the rate cut.
• The Australian treasurer, Jim Chalmers, said that the decision of the Bank of the Australian Reserve of maintaining the rates was not even the result that millions of Australians expected or what the markets anticipated. Chalmers added that the Central Bank has indicated a clear direction on inflation and interest rates in the future.

The Australian dollar is maintained around the nine -day Ema about 0.6550

The Aud/USD pair is negotiating around 0.6555 on Tuesday. The technical analysis of the daily graphic indicated a persistent bullish feeling, since the pair is positioned within the ascending channel pattern. The 14 -day relative force (RSI) index remains slightly above the 50th mark, strengthening the bullish bias. However, the pair is around the nine -day exponential mobile (EMA), indicating that the impulse of the short -term price is neutral.

On the positive side, the Aud/USD torque could approach to the maximum of eight months of 0.6595, which was reached on July 11. A rupture above this level could strengthen the bullish bias and support the torque to explore the region around the upper limit of the upward channel about 0.6690.

The Aud/USD torque is testing its immediate support in the nine -day EMA of 0.6551, followed by the lower limit of the ascending channel around 0.6520. A rupture below this channel would weaken the impulse of the short -term price and exert the downward pressure on the torque to navigate in the area around the EMA of 50 days in 0.6488, aligned with the minimum of three weeks at 0.6485.

AUD/USD: Daily graphic