AUD/USD sellers attack 0.7350 on softer China Retail Sales, Industrial Production
- AUD/USD consolidates Friday’s gains, refreshing intraday low after China data dump.
- China Retail Sales, Industrial Production ease below market consensus and prior releases in July.
- The virus woes, US stimulus deadlock back the risk aversion wave and favor the pair sellers.
- Qualitative catalysts to remain on the driver’s seat amid a light calendar ahead of Thursday’s Aussie jobs report.
AUD/USD refreshes intraday low to 0.7353, down 0.22% on the day, after China released headlines data on early Monday. The Aussie pair jumped the most in one week the previous day amid broad US dollar weakness but risk-off mood and downbeat statistics from Beijing weigh on the quote afterward.
China’s Retail Sales for July eased to 8.5% YoY versus 11.5% expected and 12.1% prior. Further, Industrial Production also weakened below 7.8% market consensus and 8.3% previous readouts to 6.4% yearly during the stated month.
In addition to the downbeat data from Australia’s biggest customer, AUD/USD also bears the burden of the sour sentiment, due to its risk-barometer status.
The latest fears could be linked to Australia’s covid figures for Sunday as the key New South Wales state recorded all-time high infections, pushing the nation count to the fresh top since August with the 500 figure. Also weighing on the market sentiment could be the Wall Street Journal’s (WSJ) news signaling the record hospitalizations for 30–39 years old in the US.
It’s worth noting that the weakest consumer sentiment data from the US, published Friday, adds to the economic fears.
On a different page, the Taliban’s quest for power in Afghanistan and the US-Iran, as well as the Sino-American, tussles also weigh on the AUD/USD prices.
Amid these plays, the US 10-year Treasury yields drop 3.4 basis points (bps) to 1.263% after declining the most since July 06 on Friday. Also portraying the risk aversion is the S&P 500 Futures that drop 0.30% intraday by the press time.
Having witnessed an initial reaction to China data, AUD/USD traders will keep their eyes on the risk catalysts for fresh impulse.
Technical analysis
The Aussie pair defies the previous day’s recovery moves while declining back below the 0.7380-85 resistance convergence, comprising 21-day EMA and a monthly falling trend line. Given the strong Momentum line backing the downside moves, AUD/USD sellers have higher hopes to extend the pair’s latest fall. In doing so, an ascending support line from July 21, near 0.7320, gains immediate attention ahead of the 0.7300 threshold.
Alternatively, recovery moves need to stay beyond 0.7385 to regain the 0.7400 round figure but the bulls may remain skeptical unless witnessing a daily closing beyond 0.7410, encompassing an upper line of a horizontal area established since July 09.