Read the full USD/JPY forecast, including chart setups and trade ideas.
Beyond Japan, market attention on China has also intensified, with key data and trade developments likely to influence the AUD/USD pair.
China Inflation and US-China Trade War in Focus
Turning the focus to the AUD/USD pair, Chinese inflation figures will give insights into the demand environment.
Economists forecast consumer prices will rise 0.2% month-over-month in September after stalling in August. A larger-than-expected increase could signal a sharper uptick in consumption, boosting demand for the Aussie dollar. On the other hand, an unexpected drop in prices may indicate weakening demand ahead of the Golden Week holiday. Falling prices would likely weigh on the Aussie dollar.
Traders should also consider producer price trends, given ongoing margin pressures. Economists expect producer prices to fall 2.3% year-over-year in September after declining 2.9% in August. Producers typically adjust prices based on demand conditions, passing cost increases or savings to consumers.
AUD demand would hinge on China’s economic strength, given that China accounts for roughly one-third of Australian exports. Improving demand could bolster Australian trade terms, the economy, and the Aussie dollar. Conversely, weakening demand could weigh on the Aussie dollar.
Beyond the data, US-China trade headlines will also influence AUD/USD trends. Rising tensions would weaken the Australian dollar, while hopes of a trade deal could lift sentiment.
AUD/USD: Key Scenarios to Watch
- Bearish AUD/USD Scenario: Weak Chinese data, dovish RBA comments, and rising trade tensions may push AUD/USD toward $0.645.
- Bullish AUD/USD Scenario: Strong Chinese inflation data, hawkish RBA rhetoric, and easing trade tensions may send AUD/USD above the 200-day EMA. A break above the 200-day EMA could pave the way for a move to $0.655.
See our full AUD/USD analysis for detailed trends and trade setups.
Fed Speakers and Interest Rate Differentials
While Chinese economic data and trade developments continue to drive AUD/USD volatility, traders should also monitor FOMC member speeches.
Rising expectations for Fed rate cuts in October and December could narrow the US-Aussie interest rate differential, favoring the Aussie dollar. A narrower rate differential could send AUD/USD above the 200-day EMA. A break above the 200-day EMA would bring $0.655 and the 50-day EMA into play.
On the other hand, concerns about sticky inflation and growing calls to delay further Fed rate cuts would widen the rate differential, favoring the greenback. A wider rate differential may push AUD/USD toward $0.645. A drop below $0.645 would enable the bears to target $0.64.
