China’s economy showed softer-than-expected momentum in August, with both Retail Sales and Industrial Production missing forecasts, data from the National Bureau of Statistics (NBS) revealed on Monday.
Retail Sales rose 3.4% year-over-year (YoY), below expectations of 3.8% and slower than July’s 3.7%. Industrial Production increased 5.2% YoY, also missing the 5.8% forecast and down from the prior 5.7%. Fixed Asset Investment disappointed as well, climbing just 0.5% year-to-date (YTD) YoY in August versus the 1.4% consensus and 1.6% in July.
AUD/USD reaction muted
The Australian Dollar (AUD) showed little reaction to the weaker Chinese data. At the time of writing, AUD/USD was trading 0.10% higher on the day at 0.6653, extending its modest intraday gains.
Market implications
Retail Sales data serves as a key barometer of consumer demand in China, while Industrial Production tracks factory and manufacturing output—both crucial indicators for global growth. Weaker readings signal softer domestic demand and industrial activity, raising questions over the pace of China’s recovery.
Given Australia’s close trade ties with China, stronger Chinese data often supports the AUD. In this case, the downside surprises failed to weigh significantly on the currency, with the pair instead buoyed by broader US Dollar weakness.
AUD/USD levels to watch
On the upside, resistance is located at the September 12 high of 0.6669, followed by the November 7, 2024 peak at 0.6688, and the October 21, 2024 high near 0.6724.
Initial support lies at the September 9 low of 0.6582, with further downside potential toward the September 5 trough of 0.6511. A break below could expose the 100-day Exponential Moving Average (EMA) at 0.6490.
