Early Wednesday sees the annualized figures of March month retail sales and industrial production from the National Bureau of Statistics of China at 02:00 GMT. Investors would also emphasize on the first quarter (Q1) 2019 gross domestic product (GDP) figure that’s up for release with other headline catalysts and increase the importance of data-dump.
Retail sales growth is expected to have strengthened to 8.4% year-on-year against 8.2% reported prior whereas industrial production is seen following early-month PMI figures and may rise 5.9% YoY figure versus 5.3% previous readout.
TD Securities expect the upbeat outcome of the scheduled data as it says,
“We expect a slightly above consensus outcome for China’s Q1 GDP, expected at 6.4% y/y, (consensus 6.3% y/y). High frequency indicators were soft in Jan/Feb but our top down model for PMIs reveals an improvement in March, helped by a lower base due to the timing of the LNY holidays. The non-manufacturing sector in particular is showing signs of recovery. At the least, the pace of deceleration has eased, with stimulus measures starting to take effect and growth likely to have bottomed sequentially.”
Analysts at Westpac were also positive of the release as they said in a report that,
"There seems to be little danger of a notable surprise on GDP, given that annual growth has printed no further than 0.1ppt from the Bloomberg median forecast every quarter since Q2 2015. Although consensus is already looking for a mild uptick in production (5.9%yr) and sales growth (8.4%yr), consensus expectation at this juncture is better seen as a combination of hope and forecasts."
How could it affect the AUD/USD?
Early-month releases of upbeat purchasing manager index (PMI) and positive developments surrounding the US-China trade negotiations are likely spreading optimism concerning China’s data-dump, which in turn could be well received by the Australian Dollar (AUD) as the dragon nation is Australia’s largest customer.
Looking at the overall positive market consensus, the AUD/USD pair is likely to confront 0.7195-0.7200 resistance-joint including 200-day SMA and a horizontal line since late- February on welcome data. Also, pair’s rise past-0.7200 enables it to challenge 0.7235/40 resistance-area.
Meanwhile, disappointment from the data could fetch the quote to 0.7140 support-joint that encompasses 100-day SMA and 61.8% Fibonacci retracement of its December 2018 to January 2019 decline. Should prices decline under 0.7140, 50-day SMA level of 0.7105 and ascending trend-line stretched since early-March around 0.7080 could gain market attention.
Key Notes:
AUD/USD aims for 0.7195/0.7200 resistance confluence ahead of China data
AUD/USD Technical Analysis: 0.7179 is the level to beat for the AUD bulls, focus on China data
About China's Gross Domestic Product (GDP) data
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 data
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 data
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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