When is China’s data dump and how could it affect the AUD/USD?


Early Wednesday sees the annualized figures of July month Retail Sales and Industrial Production from the National Bureau of Statistics of China at 02:00 GMT. Investors would emphasize more on the data considering the latest swing of the dragon nation’s economics. The statistics gain more importance for the AUD/USD amid mixed clues concerning another rate cut from the Reserve Bank of Australia (RBA) and the US-China trade developments.

Retail Sales growth is expected to clock in at 8.6% year-on-year against 9.8% reported prior whereas Industrial Production might retrace from previous surprise hike of 6.3% to 5.6% (YoY).  Adding to the line is July month fixed asset investment data on the year to date YoY basis. The investment gauge is likely remaining unchanged at 5.8%.

Westpac expects the correction of the previous month’s unexpectedly strong data while saying:

June was unexpectedly strong, with industrial production up 6.3% y/y, retail sales 9.8% y/y. The latter was the fastest growth since March 2018, suggesting some distortions that could unwind in July. Consensus is 6.0% on IP, 8.6% on retail sales and 5.8% (year to date vs 2018) on fixed asset investment.

How could it affect the AUD/USD?

With the latest trade positive news from the US paving way for a good start to the September month negotiation between the world’s top to economies, positive results from the largest customer could help the Aussie recover from multi-year lows. However, previous readings were surprisingly high and hence a retracement in outcome is expected. Recent buyers will be disappointed to see figures well beneath the forecasts as protests in Hong Kong and uncertainty surrounding the RBA’s next move still looms.

Technically, 0.6750/45 restricts the pair’s near-term declines ahead of highlighting 0.6700 round-figure and the latest lows around 0.6677 whereas June month bottom close to 0.6830 seem immediate resistance holding the door for the fresh run-up to 21-day exponential moving average (EMA) level of 0.6850 and an early-July low of 0.6910.

Key Notes

AUD/USD holds on to gains with all eyes on the key Australia/China statistics

AUD/USD Analysis: relief bounce fell short of affecting trend

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.

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