Chinese third quarter GDP is due at 0200 GMT and is expected to slow to 7.2% y/y, short of the 7.5% official target. A full preview of the release is here along with some other data points that will be released at the same time.
For the market, the Australian dollar always takes center stage on Chinese data because of the sensitivity of its exports.
There’s some chatter in the market and here’s the thinking.
- If GDP is strong, it’s a good for Australia an could boost AUD/USD back to 0.8900.
- If GDP is weak, the kneejerk in AUD/USD will be lower but it’s a buying opportunity because softer GDP will be a precursor to more Chinese stimulus.
Technically, the picture is more balanced. The pair is consolidating after a swift move to the downside. The chart argues to going with a break in either direction.