Early Monday, the market sees the fourth quarter (Q4) GDP and annualized figures of December 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 the dragon nation’s recent struggle amid the virus resurgence and financial market risks. 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 Q34 GDP to print mixed outcomes with 1.1% QoQ and 3.6% YoY figures versus 0.2% and 4.9% respective market consensus. Further, Retail Sales and Industrial Production (IP) data bear negative forecasts of 3.7% and 3.6% versus 3.9% and 3.8% earlier readouts in that order.
Ahead of the data, Reuters said,
China's economy likely grew at the slowest pace in 1-1/2 years in the fourth quarter, dragged by weaker demand due to a property downturn, curbs on debt and strict COVID-19 measures, raising the heat on policymakers to roll out more easing steps.
How could it affect the AUD/USD?
AUD/USD remains on the back foot around 0.7210, down 0.11% intraday, during early Monday. In doing so, the risk barometer pair portrays the market’s fears of the coronavirus as well as the Fed rate hike.
Given the headline numbers from the world’s largest industrial player, the data will undoubtedly be the key for all traders, mainly the ones who like 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 and financial market turmoil in Beijing. Even so, the outcome could provide wild swings to the Aussie pair but gains to the Aussie pair are likely to be tamed even if the actual reading print upbeat results, due to the Omicron and hawkish Fed concerns.
Technically, AUD/USD remains pressured inside a short-term bullish chart pattern but below the key moving averages. Given the sluggish oscillators, the quote is likely to remain inside a 1.5 month-long bullish channel formation. That said, a convergence of the 20-DMA and 50-DMA restricts the Aussie pair’s immediate downside to around 0.7210.
Key Notes
AUD/USD: Sour sentiment directs sellers towards 0.7200 ahead of China GDP
AUD/USD Price Analysis: Bears pressure 0.72 the figure, eyes on key employment data
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.