AUD/USD – Evergrande Escaped Yet Another Default

#OPINIONLEADER#

 NOV 12, 2021

• Jobs lost in Australian job market in October
• Evergrande made another last-minute payment
• Potential selling opportunity of AUD/USD

Chart 1: AUD/USD H4 chart

The Australian job market performed poorly in October, reporting a loss of 46,300 jobs instead of the anticipated gain of 50,000 jobs. Unemployment rate rose from the previous 4.6% to 5.2% instead of the expected 4.8%. Although it was reported that the poor figures may likely be due to the period of time when the jobs survey was carried out – COVID restrictions in New South Wales were eased but Victoria state was still in lockdown, the market did not react kindly to the disappointing data, resulting in the weakening of the Australian dollar across the board.

AUD/USD took a strong hit during midweek when the released inflation report showed that prices in the U.S. hit a three-decade high level in October, causing the U.S. dollar to strengthened. Together with the poor Australian jobs report, AUD/USD traded lower into the 0.73 handle. Yesterday, it was reported that China’s second largest property developer Evergrande has once again escaped the fate of default when it made a last-minute bond payment at the end of a 30-day grace period. Although that has relieved some pressure off the Australian dollar, it was reported that China’s top banking regulator is investigating the relationship between Evergrande and a Chinese regional bank that could potentially impact the developer negatively.

With the strong U.S. dollar, weak Australian dollar and ongoing uncertainty over Evergrande’s fate, if AUD/USD were to break below the 0.73 handle, there may be strong selling opportunities.

Trade Setup for AUD/USD (H4)

Sell Stop at 0.72700

Upcoming news that may impact price movement of AUD/USD

12 November – U.S. Preliminary UoM Consumer Sentiment data release at 2300 (GMT+8)

13 November – FOMC Member Williams speaking at 0110 (GMT+8)

15 November – Reserve Bank of Australia Assistant Governor Ellis speaking at 0830 (GMT+8)

16 November – Reserve Bank of Australia monetary policy minutes release at 0830 (GMT+8)

16 November – Reserve Bank of Australia Governor Lowe speaking at 1030 (GMT+8)

16 November – U.S. Retail Sales m/m data release at 2130 (GMT+8)

17 November – FOMC Member Barkin speaking at 0100 (GMT+8)

17 November – FOMC Member Bostic speaking at 0100 (GMT+8)

17 November – FOMC Member Daly speaking at 0430 (GMT+8)

17 November – Australian Wage Price Index q/q data release at 0830 (GMT+8)

18 November – FOMC Member Daly speaking at 0140 (GMT+8)

18 November – FOMC Member Evans speaking at 0505 (GMT+8)

18 November – Reserve Bank of Australia Assistant Governor Ellis speaking at 1200 (GMT+8)