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China is scheduled to release August figures for retail sales, industrial production and fixed asset investment at 2:00 GMT today.

The consumption as represented by the retail sales is expected to have increased 8.8 percent year-on-year in August, unchanged from July. Industrial production and fixed asset investment are called at 6 percent and 5.5 percent respectively.

Essentially, the world’s second-largest economy is set to report the retail sales at the weakest since 2003 and investment growth near record lows.

Impact on the AUD

China’s factory activity has been cooling this year, courtesy of Beijing’s tough pollution curbs. Add to that, the escalating US-China trade tensions and the prospects of a deeper slowdown appear high.

Hence, industrial production could turn in weaker-than-expected, but may not have a big impact on the Aussie dollar (a proxy for China) as the factory growth slowdown is pretty much expected.

However, the AUD will likely come under pressure if the retail sales print well below forecasts, indicating that domestic demand is not strong enough to cushion China’s economy from the external shocks.

That said, the renewed hopes of US-China trade talks could ensure that a pullback in the AUD/USD, if any, is short-lived.

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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