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 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 recovery in the dragon nation’s economics, except for Caixin Services PMI.

Retail Sales and Industrial Production (IP) figures bear upbeat forecasts of 0.1% and +5.1% versus -1.8% and +4.8% respective priors. Though, Fixed Asset Investment is likely to weaken from -31% to -3.3% on a Year To Date (YTD) basis for the July month.

Westpac follows the market forecasts while saying:

Industrial production has benefited from domestic and regional recovery. Output was up 4.8%yr in June, with consensus for further improvement to 5.2%yr in July. Retail sales are seen finally up over the year, though only just, 0.1% versus -1.8%yr in June. Fixed asset investment is seen improving from -3.1% to -1.6% in year to date terms, property investment +2.5%ytd.

How could it affect the AUD/USD?

AUD/USD has recently been weighed down by the rise in the US Treasury yields and downbeat concerns of the RBA despite receding coronavirus (COVID-19) cases at home. The Aussie pair drops only a minor 0.05% to 0.7145 by the press time of the early Asian session on Friday.

Considering the recently upbeat data from Australia’s largest customer China, investors might prefer covering short trades on another round of positive numbers. However, the rise may struggle to defy any negative comments from the RBA Governor Philip Lowe’s on-going testimony, if any. On the broader outlook, traders may wait for the economy to recover from the COVID-19 pandemic while keeping eyes on the US stimulus for fresh impulse.

Technically, 21-day EMA near 0.7120 restricts the pair’s immediate downside ahead of 0.7100 round-figures and an ascending trend line from June 15, at 0.7080 now. Meanwhile, buyers are less likely to take fresh entries unless witnessing a clear break above 0.7200, which in turn could aim to refresh the monthly top surrounding 0.7145.

Key Notes

AUD/USD Forecast: Easing within range, strong support at 0.7070

AUD/USD ignores RBA’s Lowe to keep choppy range near 0.7150, China data in focus

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.