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

China Economic Data Overview

Early Monday, the market sees the annualized figures of May 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.

Retail Sales and Industrial Production (IP) bear upbeat forecasts of -2.0% and +5.0% versus -7.5% and +3.9% respective priors. Further, Fixed Asset Investment could also recover from -10.3% to -5.9% on a Year To Date (YTD) basis for the May month.

Westpac follows the market forecasts while saying:

Consensus for industrial production is a 5.0%yr gain after 3.9%yr in April. Fixed asset investment is seen at -6.0% YoY, continuing to recover, led by infrastructure spending and an uptick in global momentum. Retail sales may recover more slowly, but government initiatives such as shopping coupons and travel promotions should support consumption, with consensus -2.3%yr after -7.5%yr in April. 

How could it affect the AUD/USD?

AUD/USD has recently been weighed down by the strong risk aversion wave mainly due to the jump in the coronavirus (COVID-19) cases in the US, Tokyo and Beijing as well as fears of no v-shaped economic recovery. The Aussie pair drops 0.50% to 0.6830 by the press time of the early Asian session on Monday.

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 shouldn’t be taken as a trend reversal unless AUD/USD prices rally heavily on extreme outcomes, which are less likely.

Technically, a sustained downside break below the said support line will have to travel through the tops marked in February and March, respectively around 0.6775 and 0.6685, to revisit the 200-day SMA level of 0.6665. Alternatively, the Aussie pair’s failure to offer a daily closing below an ascending trend line from March 19, at 0.6815 now, can again push it towards the mid-January top nearing 0.6935. Though, the pair’s further upside could be restricted by 0.7000 threshold.

Key Notes

AUD/USD: Depressed above 0.6800 ahead of China data

AUD/USD Forecast: Bears will have to wait

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.