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China data dump overview

Early Tuesday at 02:00 GMT China will be releasing several different series of economic indicators, and Aussie traders will be keeping a close eye on the release to see if Chinese growth factors will be enough to spur an upwards bump in the AUD.

The complete list for China numbers today includes M2 Money Supply, y/y Retail Sales, y/y Industrial Production, YTD Fixed Asset Investment, July New Loans, as well as Foreign Direct Investment, though the FDI specific release time is unknown. The important readings for traders today will be y/y Retail Sales and y/y Industrial Production, with retail sales expected to come in steady at 9%, while industrial production is expected to lift slightly from 6.0% to 6.3%. Market participants recently braced for negative headwinds from the US-China trade war to knock Chinese growth figures lower, but recent data from China has signaled that downward pressures on trade may not be anywhere near as bad as previously thought, and there’s a real chance that an upwards shot for China data today could spur a bullish recovery for the Aussie.

How could it affect the AUD/USD?

With expectations of China growth hobbled on trade fears, a green printing for the important numbers today will provide just the impetus that Aussie bulls are hoping for, and the AUD/USD is primed for a bullish correction  as noted by FXStreet’s Chief Analyst, Valeria Bednarik: “technical readings are aligned with the market’s sentiment, as in the 4 hours chart, technical indicators remain near their recent lows and in oversold readings, as the 20 SMA heads sharply lower below the 100 and 200 SMA, all of them far above the current level. A clear break of the 0.7250 region should lead to a steeper decline, despite the extremely overbought dollar, particularly if equities and metals continue drifting lower.”

Support levels: 0.7250 0.7215 0.7180

Resistance levels: 0.7290 0.7320 0.7360  

Key notes

AUD/USD analysis: bearish breakout around the corner

About China 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.

About China 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, whereas a low reading is seen as negative (or Bearish) for the CNY.