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Risk assets focus on China GDP

Four markets in focus today: AUD/USD, Spot Gold, GBP/USD and Rio Tinto.

China retail
Source: Bloomberg

AUD/USD

After a long period of range trading, we might finally see some AUD volatility today with a raft of releases out of China. At midday we get China’s GDP, industrial production, fixed asset investment and retail sales. While GDP is expected at 7.4%, there are some analysts who feel we could see it edged higher to around 7.5% helped by the rebound in activity. Should this be the case, then risk could be in for a run higher today. The key for AUD/USD would be a trade back towards 0.9500 before traders reassess their positions.

Spot Gold

The precious metal took another hit in US trade as Janet Yellen’s testimony signalled a shift to a less dovish tone. Having already been under pressure, traders saw this as an opportunity to drag the precious metal even lower. Gold was right on key support of around 1307 at the end of yesterday’s Asian trade but has now dropped below 1300 and is looking quite vulnerable. The 38.2% retracement of the April to June slump is at 1298 and the key for sellers will be a close below this level. Alternatively rallies back into 1307 (previous uptrend) could also be used as an opportunity to initiate shorts. There could be some volatility today with plenty of releases out of China likely to set the tone.

GBP/USD

Cable nudged through July highs in overnight trade and came within striking distance of 1.7200. While the pair has pulled back a touch, it remains in a firm uptrend and is likely to continue finding buyers on dips. On the UK calendar today we have claimant count change, unemployment rate and average cash earnings due out. Any further signs of economic improvement could see a retest of the 1.7200 barrier.

Rio Tinto

The mining giant is looking good from a fundamental and technical perspective. RIO released its Q2 production report today which showed an 11% rise in iron ore production. The company also raised its FY copper guidance along with an iron ore expansion which has seen a jump in profit. The results were a touch ahead of consensus and should underpin the stock today. A key for the stock will be a break above early July highs of 63.38. This could see the stock head towards $65 in the near term.

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