China’s trade balance data for October will be released by the General Administration of Customs on Friday at 03.00 GMT. Expectations are for the trade balance to widen to $95.60 billion from the previous $90.45 billion, with exports and imports anticipated to rise by 3% and 3.2%, respectively.
This economic indicator can influence the Forex market due to China’s role in the global economy. The AUD/USD has seen gains as the US Dollar weakens following data indicating softness in the US labour market, prompting rate cut expectations.
AUD Resistance and Support Levels
A better-than-expected trade balance could support the Australian Dollar, with resistance at a 100-day EMA of 0.6525 and further upside barriers at 0.6560 and 0.6620. Conversely, a fall might see support at 0.6472 and further downside towards 0.6424 and 0.6400.
The Australian Dollar is driven by interest rates set by the Reserve Bank of Australia, Iron Ore prices, and the Chinese economy’s performance. A positive trade balance strengthens the AUD, while a negative one could weaken it.
Economic health in China influences the AUD directly, as strong Chinese demand for Australian exports boosts the currency value. The price of Iron Ore also impacts the AUD, with higher prices enhancing Australia’s trade balance and supporting the currency.
Recent Trade Data and Implications
Given today’s date, the Chinese trade balance data for October has just been released. We were watching for a surplus around $95.60 billion, a figure that serves as a crucial indicator of global economic health. A strong number typically boosts the Australian dollar, which was already firming up due to recent weakness in the US labor market that increased speculation of a Federal Reserve rate cut.
If this trade data has come in better than expected, it validates a bullish view on the AUD/USD for the coming weeks. Derivative traders should consider this a signal to look at call options or long futures contracts, targeting the first resistance at the 0.6525 level. A sustained break above that price could see a quick move toward the 0.6560 and 0.6620 highs from previous months.
Conversely, a disappointing trade surplus would confirm fears about slowing global demand and put pressure on the Australian dollar. In this scenario, buying put options or establishing short positions would be a logical response, with the 0.6472 low serving as the initial target. Extended weakness would likely bring the 0.6400 psychological level into play.
This release is significant when we look back at the economic patterns of 2024, where China’s export growth was often unsteady due to uneven global recovery. For instance, throughout 2024, industrial output figures consistently hovered around the 5-6% year-over-year mark, showing resilience but not the booming growth seen in prior cycles. A strong trade number today would therefore suggest a more robust demand picture is finally emerging.
We also have to consider the price of iron ore, Australia’s main export, which has provided underlying support for the currency. Iron ore prices remained surprisingly resilient for most of the last year, holding above $110 per tonne despite concerns over China’s property sector. A positive surprise in China’s trade data reinforces demand for industrial commodities and could give AUD/USD another reason to climb.
