AUD/USD extends the drop to 0.7040, China data weighs

• Sold-off amid a drop in Chinese industrial profits and USD comeback vs. risk currencies.
• Downside opening up towards 0.7000 levels amid pre-New Year holidays thin trading.

The AUD/USD pair is seen extending its Asian decline in the early European dealing, as the sellers remain in control amid a sell-off in the risk assets following disappointing Chinese macro news.

China’s industrial profits for December fell for the first time in three years, arriving at -1.8% y/y versus 3.6% previous. On the release, the Aussie changed course and fell about 20-pips from a high of 0.7077.

The selling intensified last hour and the bears now threaten the two-month lows of 0.7030 reached last week, as the US dollar attempts a minor recovery versus the commodity-currencies, the AUD; CAD and the Kiwi, with risk appetite waning amid a sell-off in oil prices, US equity futures and Treasury yields.

Markets believe the downside moves in the Aussie could be exaggerated by thin volumes while no major fundamental catalyst could also leave the spot largely tracking the USD price-action.

AUD/USD Technical Levels