China data overview
China data scheduled for release at 02:00 GMT is expected to show the industrial production increased 6.3 percent year-on-year in March vs 6.0 percent gain seen in February. Meanwhile, consumption, as represented by retail sales, is seen rising 10 percent in March against February’s 10.1 percent gain. Further, the growth in the fixed asset investment is expected to have slowed slightly to 7.4 percent (YTD) year-on-year in March from 7.5 percent in February.
How could the data affect the AUD/USD?
An above-forecast industrial production reading could strengthen the bid tone around the Aussie dollar – a liquid proxy for China. Note, the Australian currency is already on the rise, courtesy of the bullish reversal in the daily chart and hence could rise well above 0.7565 (38.2% Fib R of April 19 high – May 10 low) on the back of strong data.
Meanwhile, a weaker-than-expected China data dump could set the tone for a re-test of support at 0.7473 (May 1 low). A daily close below that level would mean the corrective rally from the May 9 low of 0.7412 has ended.
About China’s industrial production data
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).
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