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The Aussie has been having a good start to the year so far thanks to overall risk appetite and a bit of dollar weakness. Can the bulls sustain the momentum this week?

Here are some catalysts that might affect the comdoll’s price action:

China’s trade data (Jan. 15, Asian session)

China’s trade surplus widened to an 11-month high in November, as exports (+5.4%) rose faster than imports (+3.0%) from a year ago.

Is China’s trade activity getting stronger after printing mixed results in the past couple of months? Or are we seeing short-term boosts from the holiday season?

This week, analysts expect to see a trade surplus of 345B CNY/$51.6B after seeing the numbers at 306B CNY/$44.7B in November.

Export-dependent economies like Australia will be affected by China’s imports numbers, which could signal future demand strength from its economy. Make sure you’re watching when the report is printed!

Overall risk sentiment

Another week, another chance to trade market risk sentiment?

There are no scheduled meetings between the U.S.-China reps this week, so the trade deal story might take backseat to other headlines. Instead, Brexit-related headlines might take center stage.

Aside from the U.K.’s big Parliamentary vote scheduled (maybe) tomorrow, we’ll also hear from monetary policy bigwigs like ECB’s Draghi, BOE’s Mark Carney, and BOJ’s Kuroda over the next couple of days.

Will the lack of developments in the U.S.-China trade war story induce some profit-taking for the Aussie bulls? Or will this week’s other headlines extend its bullish momentum?

Last Week’s Price Review

Nice run for the Aussie after taking out most of the majors to end the week in second place, rising on global risk-on sentiment and disregarding net weak Australian data.

Overlay of AUD Pairs & Gold (Black Line): 1-Hour Forex Chart
Overlay of AUD Pairs & Gold (Black Line): 1-Hour Forex Chart

Major Market Drivers for the Australian Dollar

As always, the Aussie took some directional cues from gold prices but the bulls came out to play on this currency, mainly on the improving global risk sentiment set in motion by signs of modest progress from the U.S.-China trade talks earlier this week.

Another possible catalyst for bullish sentiment for the Aussie could be from China, more specifically the possibility of stimulative actions from the People’s Bank of China, which is a big deal for Australia as they are huge trading partners.  China has been spitting out some ugly data recently (e.g, fall in car sales and slowest factory prices rise in two years), so any kind of stimulus news is certainly welcomed by risk-on traders, and we’re likely to see more stimulus given the weaker growth outlook for China.

A final boost for the Aussie likely came at the end of the week with the better-than-expected Australian retail sales data. Given the slew of weak data points earlier in the week, it’s likely Aussie traders saw this as a sign that the broad slowdown won’t be sharp and lifted the Aussie higher into the weekend.

Australian Headlines and Economic data