AUD/USD is a bearish flag after impressive GDP data of China.

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The AUD/USD pair formed a bearish flag pattern as investors reacted to Chinese GDP data.
The country’s economy expanded by 4.9% year-on-year in the second quarter.
Retail sales, unemployment and industrial production were strong in September.

The AUD/USD pair has hardly changed as investors digest the recent positive Chinese economic data. The pair is trading at the 0.7090 level, slightly above the Friday low of 0.7060.

AUD/USD reacts to Chinese GDP data
China’s recovery is gaining speed

China, the source of the Covid 19 pandemic, has recovered relatively well. The country, with a population of more than 1.3 billion people, has only 91,436 infections and fewer than 5,000 deaths. This is a significantly lower number compared to the United States, which had more than 2 million infections and more than 200,000 deaths.

The impact of China’s handling of the economy is visible in the latest growth data. According to the country’s Bureau of Statistics, the country’s economy grew 4.9% year-on-year and 2.7% QoQ in the third quarter. In the second quarter, the economy had expanded by 3.2%, making it the first major economy to expand. Nevertheless, the quarterly growth was lower than the 5.2% expected in a Reuters survey.

The office said that exports had grown for the past four consecutive months as global demand increased. In September, they accelerated by 10%. Fixed capital formation rose by 0.8%, while government investment also increased.

Regardless of this, retail sales, which were relatively weak this year, rose 3.3% in September after rising 0.5% the previous month. The unemployment rate also fell to 5.4%, below that of the US and the European Union. Industrial production also rose by 6.9%, in line with analysts’ expectations.

The Chinese figures are important for the Australian economy and the AUD/USD price. This is because China is the largest consumer of Australian goods such as copper, iron ore and coal. It is also the largest foreign consumer of Australian services such as education and tourism.

Tomorrow the Australian dollar will react to the protocol of the Reserve Bank of Australia (RBA). These minutes will give a clear picture of the discussions that officials had during the last monetary policy meeting. At that meeting they left interest rates unchanged and continued asset purchases.

Technical outlook AUD/USD
Technical Table AUD/USD

The four-hour chart shows that the AUD/USD price has been range-trading within a relatively narrow range lately. The pair is now in the fourth wave of the Elliot Wave pattern. It also forms a bearish flag pattern, which is shown in pink. The price has also moved slightly below the exponential moving 25-day and 15-day averages. Therefore. I suspect that the pair will eventually break down as it attempts to complete the Elliot wave pattern.

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