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


Early Friday, the market sees the third quarter (Q3) Gross Domestic Product (GDP) and annualized figures of September month Retail Sales, 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 become key for the AUD/USD amid mixed clues concerning another rate cut from the Reserve Bank of Australia (RBA) and the US-China trade developments.

China’s Q3 GDP is anticipated to have softened to 6.1% from 6.2% on a YoY basis while also likely declining to 1.5% from 1.6% on a QoQ format. Though, Retail Sales and Industrial Production (IP) bear upbeat forecasts of 7.8% and 5.0% versus 7.5% and 4.4% respective priors.

Westpac forecasts less surprise from the GDP while emphasizing IP data while saying:

"Consensus on China Q3 GDP (1pm Syd/10am local) is 6.1%yr, edging down from 6.2% in Q2. There is little tension over the headline figure, since the official number has been either exactly in line with or within 0.1ppt of the Bloomberg median forecast every quarter since Q2 2015. There may be a better sense of the growth pulse in the Sep monthly data on retail sales, fixed asset investment and especially industrial production. IP growth tumbled to 4.4%yr in August, the slowest pace since 2002 (which was a lunar new year distortion). Consensus is for a rebound to a still muted 4.9%."

TD Securities, on the other hand, has more dovish outlook for the GDP over the other statistics:

"The September hard data round is likely to echo the PMI survey data, with improvements likely in fixed assets growth, industrial production and retail sales. Some opening of the credit taps and the impact of targeted easing measures, will likely help to fuel the improvement, albeit from historically low levels. GDP is likely to have softened in Q3 however, given weakness in high frequency data in the previous two months. We expect a 6.0% y/y increase in Q3 GDP."

How could it affect the AUD/USD?

Although upbeat economic at the largest customer will dim prospects of further rate cuts after Thursday’s surprise decline in Australian employment data, doubts over the US-China trade developments and mixed messages from the RBA policymakers could keep the AUD/USD pair’s upside capped.

Technically, a 100-day Exponential Moving Average (EMA) level near 0.6855 and September month high around 0.6900 seems tough resistances to watch during the pair’s further rise while 0.6810/05 and 0.6780 can please sellers in a case of the pullback.

Key Notes

AUD/USD buyers catch a breath near 0.6820 with eyes on China GDP

AUD/USD Analysis: Chinese GDP could interrupt the run

About China’s GDP

The Gross Domestic Product (GDP) released by the National Bureau of Statistics of China studies the gross value of all goods and services produced by China. The indicator presents the pace at which the Chinese economy is growing or decreasing. As the Chinese economy has influence on the global economy, this economic event would have an impact on the Forex market. Generally speaking, a high reading is seen as positive (or bullish) for the CNY, while a low reading is seen as negative ( or Bearish).

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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