When is China’s data dump and how could it affect the AUD/USD?

Early Friday, the market sees the fourth quarter (Q4) GDP and annualized figures of December month Retail Sales and Industrial Production from the National Bureau of Statistics of China at 02:00 GMT. Investors would emphasize more on the data considering the latest swing of the dragon nation’s economics. The statistics become important for the AUD/USD traders amid mixed clues concerning another rate cut from the Reserve Bank of Australia (RBA) and the phase-one deal between the US and China.

China’s Q4 GDP is anticipated to have remained unchanged at 6.0% on a YoY basis while also likely sticking to 1.5% QoQ growth. Though, Retail Sales and Industrial Production (IP) bear downbeat forecasts of 7.8% and 5.9% versus 8.0% and 6.2% respective priors.

Westpac forecasts less surprise from the GDP while emphasizing other data:

China's GDP for Q4 is today’s key release (1 pm Sydney /10 am local). Annual growth is expected to print at 6.0%yr, in line with the Q3 result. This will leave year-average growth at the low-end of authorities’ 6.0-6.5% target for 2019. The detail on investment and consumption will be key and monthly data for December will provide additional context. Of the December data, we will be most interested in industrial production, with consensus 5.9%yr vs 6.2%yr in November.

TD Securities, on the other hand, has a slightly more hawkish outlook:

Overall, growth indicators perked up into year-end, helped by a further opening of the credit taps, easing US-China trade tensions and strengthening external demand. We think the improvement in manufacturing PMI points to upside risks to industrial production compared to consensus, while retail sales are likely to hold up at an 8.0% pace amid some resilience in service sector health and consumer spending. China's data dump will also include Q4 GDP this month and we expect a 6.0% y/y pace, the same as in Q3, with growth continuing to be led by tertiary industry.

How could it affect the AUD/USD?

Given the recent recovery in the market’s risk sentiment, backed by the US-China trade deal and upbeat Chinese statistics, positive data could keep the Aussie bulls hopeful of turning the RBA towards a more positive outlook when it meets early February. With this, the AUD/USD pair could defy the latest losses, mainly pilled due to the US dollar strength.

Technically, prices need to provide a daily closing beyond a 21-day SMA level of 0.6930 to aim for 0.7000, until then risks of revisiting the monthly bottom near 0.6850 can’t be denied. However, an upward sloping trend line stretched from October 02 portrays the bulls’ dominance.

Key Notes

AUD/USD: Under pressure around 0.6900 with eyes on statistics from China

AUD/USD Forecast: Back below 0.6900

About China’s GDP

The Gross Domestic Product (GDP) released by the National Bureau of Statistics of China studies the gross value of all goods and services produced by China. The indicator presents the pace at which the Chinese economy is growing or decreasing. As the Chinese economy has an influence on the global economy, this economic event would have an impact on the Forex market. Generally speaking, a high reading is seen as positive (or bullish) for the CNY, while a low reading is seen as negative ( or Bearish).

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

About China's 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.