The Australian dollar experienced a slight decline following the release of China's GDP data, which the market interpreted with some ambiguity. While a 5.2% GDP growth rate appears solid, it was accompanied by a sharp drop in real estate prices—typically a leading indicator of an approaching crisis—as well as a slowdown in retail sales. Since approximately 50% of Australia's exports go to China, the Aussie is particularly sensitive to such signals.

The probability of a rate cut by the Reserve Bank of Australia (RBA) at the upcoming August meeting stood at around 80% as of Wednesday morning, down from 89% the previous week. This reassessment may be linked to expectations that Q2 inflation will exceed forecasts. The inflation report is due in two weeks, but for now, all attention is on the labor market report, scheduled for release on Thursday.

Net short positioning on AUD increased by 239 million over the reporting week, reaching -4.853 billion. Despite the fact that AUD/USD has been steadily rising since February—coinciding with the announcement of new U.S. import tariffs (excluding a sharp drop around early April's "liberation day," which was quickly reversed)—long-term investors continue to hold net short positions on the Australian currency.

This is largely driven by geopolitical factors—the outcome of the U.S.-China standoff remains highly uncertain. For Australia, China is the primary trading partner. Global financial institutions expect that Australia will be adversely affected by the conflict, unlike, for example, New Zealand, whose export flows are more diversified across China, the U.S., Japan, South Korea, and the EU.

The fair value price currently lacks clear direction.

In the long term, the AUD/USD trend remains bullish, but further upward movement may prove more difficult. The support level at 0.6485 remains intact, with a limited risk of falling below it. The primary upside target of 0.6680/0.6710 is still in place, although the move toward it may be drawn out.