AUD/USD declines towards 0.6700 amid weak Aussie Retail Sales and China’s Covid protests

AUD/USD remains muted on a negative growth in Retail Sales as China’s Covid-inspired risks carry enough weight.
Market sentiment has turned cautious amid anti-Covid lockdown protests.
The USD Index is holding its gains above 106.00 amid a decline in investors’ risk appetite.

Sagar Dua FXStreet

The AUD/USD pair has not responded well to the downbeat monthly Retail Sales data as reported by the Australian Bureau of Statistics. The economic data has landed in negative territory at 0.2% vs. consensus of 0.4% growth and the prior release of 0.6%. The Aussie asset is expected to decline to 0.6700 as weaker retail sales data will join anti-Covid lockdown protests in China.

A slowdown in Retail sales might impact the Aussie dollar but will delight the Reserve Bank of Australia (RBA). A slowdown in retail demand usually propels a decline in the inflation rate. RBA Governor Philip Lowe is spending sleepless nights developing strategic plans to scale down inflation in Australia. The Australian inflation displayed a historic surge in its third-quarter report, which forced the RBA to escalate its inflation guidance to 8.0%.

Apart from that, anti-Covid curb protests in China have triggered a risk-aversion theme. Commodity-linked currencies are facing sheer heat amid a decline in the risk appetite of investors. Frustration led by prolonged Covid-19 curbs by Chinese authorities has forced individuals to shout slogans of ‘XI Jinping goes down. A demand for democracy over dictatorship could propel civil risks in China.

It is worth noting that Australia is a leading trading partner of China and China’s weaker economic prospects could have a significant impact on the Aussie dollar.

Meanwhile, the US Dollar Index (DXY) is holding a majority of its gains above 106.00 amid an improvement in safe-haven’s appeal. S&P500 futures have extended their losses portraying a cautionary mood of the market participants. The 10-year US Treasury yields have resumed their downside journey ahead of the speech from Federal Reserve (Fed) chair Jerome Powell.

The speech from Fed Chair, scheduled on Wednesday, will dictate the likely monetary policy action by the Fed in its December monetary policy meeting. Apart from that, United States Automatic Data Processing (ADP) Employment data will be of significant importance. The economic data is seen lower at 200k vs. the prior release of 239k.

AUD/USD

Overview
Today last price	0.6719
Today Daily Change	-0.0028
Today Daily Change %	-0.41
Today daily open	0.6747

Trends
Daily SMA20	0.6585
Daily SMA50	0.6489
Daily SMA100	0.6689
Daily SMA200	0.6936

Levels
Previous Daily High	0.6781
Previous Daily Low	0.672
Previous Weekly High	0.6781
Previous Weekly Low	0.6585
Previous Monthly High	0.6548
Previous Monthly Low	0.617
Daily Fibonacci 38.2%	0.6744
Daily Fibonacci 61.8%	0.6758
Daily Pivot Point S1	0.6718
Daily Pivot Point S2	0.6689
Daily Pivot Point S3	0.6658
Daily Pivot Point R1	0.6779
Daily Pivot Point R2	0.681
Daily Pivot Point R3	0.6839

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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