AUD/USD – Aussie losses continue as Chinese industrial output slides

AUD/USD has headed lower for a third straight day. In North American trade, AUD/USD is trading at 0.6892, down 0.34% on the day. On the release front, there are no Australian events. In the U.S., consumer spending numbers improved in May. Core retail sales climbed 0.5%, matching the estimate. Retail sales also improved to 0.5%, but fell shy of the forecast of 0.7%. Later in the day, the U.S. releases UoM Consumer Sentiment, which is expected to fall to 98.1, after an outstanding reading of 102.4 in the previous release.

The Australian dollar has had a dreadful week, falling 1.4%. The economy created an outstanding 42.3 thousand jobs in May, but this was not enough to prop up the currency. Investors preferred to focus on the unemployment rate, which remained at 5.2%, higher than the estimate of 5.1%. The currency is under pressure on Friday after soft Chinese manufacturing data. Industrial output was unexpectedly soft, dropping to its lowest level since 2002. The indicator gained 5.0% in May on an annualized basis, well off the forecast of 5.5%. The Aussie is sensitive to Chinese data, as the Asian giant is Australia’s largest trading partner.

Will U.S. consumer spending data meet the high expectations? Inflation numbers for May were soft, but the markets are counting on better news from consumer spending. Retail sales and core retail sales are expected to rebound in May, and these numbers could play a crucial role in the Federal Reserve’s forward guidance for rates. The markets are prepared for rate cuts in the second half of the year. The CME Group has set the odds of a July cut at 62% and another cut in September at 55%. Lower interest rates make the U.S. dollar less attractive to investors, which could be good news for equities.

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AUD/USD Fundamentals

Friday (June 14)

• 8:30 US Core Retail Sales. Estimate 0.5%. Actual 0.5%

• 8:30 US Retail Sales. Estimate 0.7%. Actual 0.5%

• 9:15 Capacity Utilization Rate. Estimate 78.0%

• 9:15 Industrial Production. Estimate 0.2%

• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 98.1

• 10:00 US Business Inventories. Estimate 0.4%

• 10:00 US Preliminary UoM Inflation Expectations

Open: 0.6915 High: 0.6918 Low: 0.6890 Close: 0.6892

AUD/USD Technical

AUD/USD edged lower in the Asian session and showed limited movement in the European session. The downward trend has resumed in North American trade

• 0.6825 is providing support

• 0.6968 is the next resistance line

• Current range: 0.6825 to 0.6968

Further levels in both directions:

• Below: 0.6825, 0.6744 and 0.6686

• Above: 0.6968, 0.7085, 0.7190 and 0.7240