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

China Economic Data Overview

Early Friday, the market sees the annualized figures of April 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.

Retail Sales and Industrial Production (IP) bear upbeat forecasts of -7% and +1.5% versus -15.8% and -1.1% respective priors. Further, Fixed Asset Investment could also recovery from -16.1% to -10% on a Year To Date (YTD) basis for the April month.

Westpac forecasts retail sales to be a non-event unless surprising the markets:

The recovery in retail sales is likely to remain less impressive, with consensus -6%yr versus March’s -15.8%yr but plenty of scope for a surprise. April fixed asset investment is seen -10.0%yr year to date.

TD Securities, on the other hand, has a slightly dovish outlook:

The move back into expansion territory for the manufacturing PMI in March and April points to a small increase in industrial production in April though we continue to think any recovery is tentative given the likely increase in demand side pressures. We expect a 3.5% y/y increase in IP. Retail sales are likely to continue to remain soft given the cautious approach of the authorities to re-opening though the pace of decline is likely to lessen compared to last month. Consumer related activities are likely to remain under some pressure overall.

How could it affect the AUD/USD?

While the latest risk-on sentiment helps AUD/USD to ignore downbeat employment data, the quote could extend recoveries if the largest customer manages to print welcome statistics. It should, however, be noted that the Aussie-China tussle as well as the US-Sino tension, can keep the pair’s upside capped. On the contrary, disappointing data might not refrain to trigger a fresh downside.

Technically, sellers will look for entries below the confluence of 21-day SMA and an 18-day-old rising trend line, near 0.6440 now, which in turn can refresh monthly low near 0.6380. Alternatively, a weekly resistance line near 0.6490 guards the pair’s nearby recoveries ahead of the May 11 high of 0.6562.

Key Notes

AUD/USD: Bulls keep 0.6500 on radars with focus on China data

AUD/USD Forecast: Aussie keeps grinding lower

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.