When are the RBA minutes, China data dump and how might they affect AUD/USD?

Early Tuesday morning, at 00:30 GMT, the Reserve Bank of Australia (RBA) will release minutes of the latest monetary policy meeting held during early-December. Following that, the National Bureau of Statistics of China will release November’s Retail Sales and Industrial Production data at 02:00 GMT.

With the RBA’s monetary policy decision to wait for the November monetary policy actions’ impact on the economy, today’s minute statement may have a little surprise for the AUD/USD traders. However, cautious optimism will be watched in the report. The RBA decided to maintain the official cash rate (OCR) at a record low of 0.10%, as widely expected, while also keeping its three-year bond yield target unchanged at 0.10%, during the latest meeting on December 01.

On the other hand, data from China, Australia’s biggest consumer, recently lost their importance as trading relations among the old pals have soured off-late. Even so, the figures from Asia’s biggest economy direct the market sentiment and AUD/USD as well. During their previous releases, China’s Retail Sales grew 4.3% YoY whereas Industrial Production rose 6.9% yearly.

Concerning the events, TD Securities said,

We expect a 7.1% y/y increase in Nov (cons 7.0%) industrial production, up from 6.9% y/y previously. China's manufacturing PMI indices —both NBS and Caixin— have been in expansion for several months and have strengthened even more recently. Exports have been particularly robust, helping to drive up demand for manufacturing, especially in electronics and medical equipment. If our forecast proves correct, it would mark the strongest pace of manufacturing growth since June 2017. Separately, retail sales, fixed assets, and jobs data are expected to show further improvement compared to the previous month.

The RBA Minutes from the Dec Board meeting are unlikely to provide any surprises for the market. The Board's glass-half-full outlook and recent data outcomes support the Bank's relatively upbeat view — Consumer Sentiment at 10-year highs, the jobs market recovering faster than expected and Business Confidence rebounding. Nonetheless, it is too early for the RBA to announce any changes to policy announcements.

How could the minutes affect AUD/USD?

AUD/USD moves have recently been relying more on the commodity and risk moves than the domestic and Chinese catalysts. However, upbeat data from China can help iron ore, Australia’s biggest export item, to restore the bullish momentum, lost the previous day, which in turn can favor the pair bulls near the 30-month tops. Also likely to back the trading sentiment is the RBA policymakers’ cautious optimism. The Pacific major has recently witnessed recoveries in economic activities and hopes of opening the national border with New Zealand add positives to the mood.

Technically, overbought RSI conditions keep hammering the AUD/USD bulls targeting the June 2018 peak near 0.7675/80. Though, sellers are less likely to enter before breaking a six-week-old ascending trend line, at 0.7447 now.

Key Notes

AUD/USD: Retraces from multi-month top above 0.7500, eyes RBA Minutes, China data dump

AUD/USD Forecast: Poised to extend its advance beyond 0.7600

About the RBA minutes

The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.

About China's Industrial Production

Industrial output is released by the National Bureau of Statistics of China. It shows the volume of production of Chinese Industries such as factories and manufacturing facilities. A surge in output is regarded as inflationary which would prompt the People’s Bank of China would tighten monetary policy and fiscal policy risk. Generally speaking, if high industrial production growth comes out, this may generate a positive sentiment (or bullish) for the CNY (and AUD), whereas a low reading is seen as negative (or Bearish) for the CNY (and AUD).

About China's Retail Sales

The Retail Sales report released by the National Bureau of Statistics of China measures the total receipts of the retailed consumer goods. It reflects the total consumer goods that the various industries supply to the households and social groups through various channels. It is an important indicator to study the changes in the Chinese retail market and reflecting the degree of economic prosperity. In general, A high reading is seen as positive (or bullish) CNY, while a low reading is seen as negative (or bearish) for the CNY.