When is China’s Q3 GDP and how could it affect the AUD/USD?

Early Monday, the market sees the third quarter (Q3) GDP and annualized figures of September month Retail Sales and Industrial Production from the National Bureau of Statistics of China at 02:00 GMT.

The data will be the key considering its period that includes the dragon nation’s fading of recovery from the coronavirus (COVID-19)-led economic halt. Another reason for the importance of the said figures is recently positive surprises, by way of upbeat economics, from the world’s largest commodity user and Australia’s biggest customer.

Forecasts suggest China’s Q3 GDP to print mixed outcomes with 3.2% QoQ and 5.2% YoY figures versus 11.5% and 3.2% respective market consensus. Further, Retail Sales and Industrial Production (IP) data bear positive forecasts of 1.8% and 5.8% versus 0.5% and 5.6% earlier readouts in that order.

Westpac follows the market consensus while saying:

China releases Q3 GDP and Sep activity data at 1:00 PM Sydney/10:00 am Singapore. Government stimulus has supported fixed asset investment, particularly in infrastructure and utilities; private investment growth is now accelerating too (August -0.3% ytd/yr, September market forecast: 0.9% ytd/yr). Industrial production is being bolstered by firmer domestic and external demand (August 5.6% YoY, September forecast: 5.8% YoY). Retail sales in Sep meanwhile were supported by the loosening of restrictions and spending ahead of ‘Golden Week’ (Aug 0.5% YoY, September forecast: 1.6% YoY). These broad-based gains will support a robust print for GDP in Q3 (prior: 3.2% YoY, market forecast: 5.5%yr, WBC forecast 5.8% YoY).

How could it affect the AUD/USD?

Given the headline numbers from the world’s largest industrial player’s fading recovery from the pandemic, the data will undoubtedly be the key for all traders, mainly for AUD/USD. It should also be noted that the figures from China have recently flashed upbeat outcomes and hence markets await the actual release amid mixed clues considering the virus resurgence in Europe. However, the data may be traded cautiously by the AUD/USD bulls considering the latest Sino-Aussie tussle. Even so, the outcome could provide wild swings to the markets but gains to the Aussie pair are likely to be tamed even if the actual reacting print upbeat results.

Technically, the pair’s clear break of 100-day SMA gains joins normal RSI conditions to direct bears towards a four-month-old support line, at 0.7049 now. Also acting as the key rest-point is the 0.7000 threshold. On the upside, a clear break of 0.7100, comprising the said SMA, may push AUD/USD prices towards the 0.7205/12 area including 50-day SMA and a falling trend line from September 01.

Key Notes

AUD/USD: Bears eye key support below 0.7100 ahead of China GDP

AUD/USD Forecast: Bearish pressure mounts after Lowe hints a rate cut

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 an 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.