- AUD/USD remains on the back foot, down for the third consecutive day after China data.
- China Q4 2021 GDP, Industrial Production rose past market consensus and previous readouts but Retail Sales dropped in December.
- Market sentiment stays sour amid virus fears, Fed rate-hike concerns.
- US bank holiday may restrict market moves but pair sellers can keep the reins.
AUD/USD pokes intraday low surrounding 0.7195, down 0.25% on a day, after China released the key economics during early Monday. In addition to the mixed data, risk-off mood and firmer USD also drowns the Aussie pair prices.
China’s fourth-quarter (Q4) GDP rose past 0.2% prior and 1.1% forecasts to 1.6% QoQ while the YoY figures grew to 4.0% versus 3.6% expected and 4.9% previous readouts. Further, the Industrial Production (IP) for December rose above 3.6% market consensus and 3.8% prior to 4.3%. On the contrary, Retail Sales dropped below 3.7% market forecasts and 3.9% previous reading to 1.7% in December.
Read: China data beats expectations besides Retail Sales miss, AUD/USD holds around 0.7200
In addition to the mixed data, coronavirus fears and chatters surrounding the faster Fed rate hikes also drown the AUD/USD prices, mainly due to its risk barometer status.
China’s Beijing tightens the rule for entry into the capital city after a jump in the covid cases while Japan also discusses heightened virus-led restrictions for Tokyo on witnessing more than 20,000 daily infections for the third consecutive day.
At home, Australia witnesses a fourth consecutive day of easy daily covid infections, the latest are around 65,000. It should be observed that Australia’s most populous state New South Wales (NSW) reported the biggest daily covid-linked deaths on Friday with 29 deaths, recently easing to 17 cases. Even so, Australian health authorities are confident NSW will see a plateau in its COVID-19 hospitalizations next week, as the state's numbers track "better than the best-case scenario" predicted, per ABC News.
Concerns around the Fed’s rate hike also grew stronger on Friday’s comments from Federal Reserve Bank of San Francisco President Mary Daly and New York Fed President John Williams.
Amid these plays, S&P 500 Futures drop 0.20% intraday by the press time while the US 10-year Treasury futures extend decline with the CBT TN contract implied yield rises to 1.85%, versus Friday’s close near 1.793%.
With the early signals of the stronger US Treasury yields and risk-off mood, AUD/USD prices are likely to remain pressured but a light calendar in the US and bank holiday will restrict the market moves.
Technical analysis
A clear downside break of the 50-DMA level surrounding 0.7200 becomes necessary for the AUD/USD bears to aim for the support line of a monthly ascending trend channel, around 0.7150.
On breaking the 0.7150 level, AUD/USD defies the bullish chart pattern and could drop towards the 2021 low surrounding 0.6990.
Alternatively, 50-DMA level surrounding 0.7285 and the stated channel’s upper line, near 0.7335, restricts the quote’s short-term advances.
Overall, sluggish MACD conditions and RSI retreat join the pair’s failures to stay beyond the key moving averages to keep the sellers hopeful.
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