AUD/USD pauses on the way to 0.6800 amid fears of easy Aussie spending, heavy China budget deficit

• AUD/USD seesaws around intraday high, as well as the weekly top, on mixed concerns.
• Aussie analysts predict slowdown in spending, China’s budget deficit hit record high during January-November period.
• US data, yields eyed for fresh impulse amid holiday mood.

AUD/USD grinds near an intraday high of 0.6765 heading into Thursday’s European session. In doing so, the Aussie pair seesaws near the weekly top amid mixed news surrounding Australia and China, while cheering the US Dollar’s pullback on softer Treasury bond yields.

That said, analysts from the Australia and New Zealand Group (ANZ) highlight fears of a slowdown in Aussie spending and challenge the AUD/USD bulls. “Total ANZ-observed spending from 20 Nov – 18 Dec was just 10% higher than in 2019, despite a CPI increase of 10.5% between Dec 2019 and Sep 2022 and population growth of 1.8% from Dec 2019 to Jun 2022,” said the latest report.

It should be noted that the news suggesting China’s biggest budget deficit on record also probes the AUD/USD buyers. That said, China’s budget deficit hit a record high for the first 11 months of 2022 and weigh on the AUD/USD prices.

On the other hand, Bloomberg cites China’s State Council and the People’s Bank of China (PBOC) to hint at more positives for the dragon nation. “China’s State Council, People’s Bank of China (PBoC) and the country’s top securities regulator jointly conducted a study during last week’s economic policy meeting, aiming to prioritize growth and boost the property market in 2023,” reported Bloomberg.

Also likely to propel the AUD/USD prices could be the downbeat US Treasury yields and the softer US Dollar, amid a lack of major data/events and due to the Bank of Japan’s (BOJ) efforts. That said, the US 10-year Treasury yields remain depressed around 3.65%, extending the previous day’s pullback from the monthly high while the US Dollar Index (DXY) prints mild losses near 103.90 at the latest.

Looking forward, final prints of the US Gross Domestic Product (GDP) and Core Personal Consumption Expenditure (PCE) details for the third quarter (Q3) could entertain traders ahead of Friday’s US Core PCE Price Index for November, also known as the Fed’s preferred inflation gauge. That said, the US GDP is expected to confirm 2.9% Annualized growth in Q3 while the Core PCE is anticipated to also meet the initial forecasts of 4.6% QoQ during the stated period.

Technical analysis

A clear upside break of the 0.6730 resistance confluence, including the convergence of the 200-Exponential Moving Average (EMA) and a two-day-old descending resistance line, keeps AUD/USD bulls hopeful of piercing the downward-sloping resistance line from December 13, close to 0.6785 by the press time.