FX.co ★ 07.05.2021: China reports upbeat trade data. Outlook for USD, USD/JPY, AUD/USD

The Asian session opening was brightened by good news from China. China released upbeat trade data for April with an increase both in exports and imports that widened a trade proficit. This is good news not only for China as such a trade revival indicates buoyant global demand for Chinese goods and a recovery of the global economy. How will it impact on the US dollar and other currencies? Let’s watch our video!

As we can see in the chart, the US dollar index sank to 90.900 yesterday. Obviously, the retracement was caused by strong resistance when the index was approaching the level of 91.500. Unfortunately, the price failed to overcome the resistance even despite a positive weekly update from the US Labor Department.

The number of initial unemployment claims declined notably last week in the US. This is bullish for the US dollar. Now the chart is displaying a reversal pattern. The US dollar index is expected to trade in the corridor of 90.900 to 91.200 through the American session until the publication of the US nonfarm payrolls for April.

The dollar/yen pair is still trapped in the flat market. Today the pair opened below the level of 109.200 inside the protracted sideways move. On the other hand, this opening is possible under the bullish scenario. In this case, the price seems to retreat before a sharp climb.

The dollar/yen pair is set to grow following the publication of the US employment data. The forecast for new jobs in April, excluding farm employees, is very optimistic. So, the upward target for the currency pair is seen at 110.44 which is likely to be hit in the nearest days.

The Australian dollar surpassed the target level of 0.7767 yesterday. Now it is heading for the second target at 0.7820. Nevertheless, the AUD/USD pair is expected to pull back below 0.7767 tonight. The next move is a decline to 0.7641, the lowest mark since December 17, 2020. This downward move could be prompted today by the US official employment report which is the highlight this trading week.

Let’s wait and see how the market will trade tonight in response to the crucial data.