IMF review on China speaks favorably on the economy
The newswires are reporting that the IMF has prepared a China Review where they have said the economy is turning around but there is room for additional fiscal stimulus as unemployment is thought to continue to rise in the near term. Furthermore, they advise the unwinding of monetary easing when the recovery is in place.
This news should help the AUDUSD as it stands to benefit from increased economic activity out of China. However, the reaction has been fairly muted so far. The market did break to new move highs at the 0.8212 earlier in the day but quickly reversed. The highs for 2009 remain at 0.8262 and below that 0.8236. These are the next hurdles for the bullish trend that has seen the pair retrace more than half of the move down from the July 2008 high. The next long term target for the AUDUSD comes in at the 0.8380 level which corresponds to the 61.8% retracement of the move down from July 2008 high to the October 2008 low (see chart below).
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