The AUD/USD pair trades modestly lower near the 0.6650 level during Monday’s Asian session, down around 0.10% on the day. The Australian Dollar remains under pressure after the National Bureau of Statistics of China released weaker-than-expected Retail Sales and Industrial Production figures for November.
Given Australia’s strong trade links with China, any deterioration in Chinese domestic data has a direct and meaningful impact on the Aussie. Sluggish demand from Beijing continues to weigh on sentiment toward the Australian Dollar, reflecting concerns over the outlook for exports.
China’s Retail Sales rose by just 1.3% year-on-year in November, missing market expectations of a 2.9% increase. Meanwhile, Industrial Production slowed to 4.8%, compared with 4.9% in October, falling short of forecasts that pointed to a rise to 5%.
The Australian Dollar has also been correcting over the past two sessions following the release of disappointing domestic labor market data. Figures published on Thursday showed that Australia lost 21.3K jobs in November, in sharp contrast to expectations for a gain of 20K, raising doubts about the resilience of the labor market.
Despite the near-term pressure, the broader outlook for AUD/USD remains relatively constructive as the US Dollar struggles to regain momentum. The Greenback has been weighed down by growing expectations that the Federal Reserve (Fed) could deliver more interest rate cuts in 2026 than previously projected. According to last week’s policy meeting, the Fed’s dot plot suggests policymakers expect the Federal Funds Rate to fall to 3.4% by the end of 2026, implying only one rate cut in 2025.
Looking ahead, the key catalyst for the US Dollar this week will be the United States Nonfarm Payrolls (NFP) report for November, scheduled for release on Tuesday. The data could play a crucial role in shaping near-term direction for the AUD/USD pair.
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