Global macro overview for 18/10/2017

Global macro overview for 18/10/017:

One of the most anticipated political events this autumn has just begun - the Communist Party of China, which takes place every five years, is gathering to elect new authorities (including the president) and set new political goals. President Xi Jinping's speech did not bring surprises, but for the markets may be more important than what not been said. This time, there is not much uncertainty: Xi Jinping is expected not only to be re-elected but also to strengthen his power. Therefore, the markets focus on the economic visions that can flow from China. There was not much of it during President Xi's inaugural speech, which focused on long-term goals, emphasizing that the future is bright, though with serious challenges. This is not the most important thought for the financial markets. As it is known, China in the end of 2015 strongly stimulated its economy to avoid a more severe downturn and succeed in coming to this year's Congress. However, according to the recent macro data, the momentum of monetary policy is weakening, and without a new idea of stimulating the economy, it may begin to lose its growth dynamics.

The Australian Dollar is the most exposed currency to China in the main basket, so let's take a look at the AUD/USD technical picture at the H4 time frame. The market has managed to stay above key support at 0.7732 supported by rising commodity prices, but any negative information could quickly change the current situation. Violation of the technical support at 0.7732 will open the road to much deeper decline.

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