AUD/USD: No response to horribly weak China data
|- AUD/USD is seeing little action despite dismal China.
- Both industrial production and retail sales growth slowed in August.
- Risk-off may worsen due to China data, leading to a drop in the AUD.
China reported a horribly weak factory activity and consumer spending figures at 02:00 GMT. So far, however, that has failed to move the needle on the Aussie pairs. The AUD/USD pair continues to trade largely unaffected around 0.6872.
Chinese consumer spending, as represented by retail sales, rose 7.5% year-on-year in August, missing the expected figure of 7.9% by a big margin and down from the preceding month's print of 7.6%.
Industrial production growth also slowed to 4.4% in August, following a 4.8% rise in July. The markets were expecting a print of 5.2%.
The slowdown in factory activity is not surprising, given the US-China trade tensions re-escalated in August.
What's more concerning is that consumer spending is weakening and could lead to a deeper economic slowdown in the near future.
As a result, the already depressed risk assets (due to oil spike) may extend losses during the day ahead, pushing the AUD in the red below 0.6861. As of writing, the futures on the S&P 500 are reporting a 0.65% drop.
Technically speaking, the pair looks overdue for a pullback, having failed to beat key Fibonacci retracement level of 0.6880 in the previous three trading days.
Technical levels
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