trading robot

AUD/USD Falls Back in the Direction of 0.6900 on the Basis of Reduced Retail Sales Figures from China

Weight on All Fronts Land on the Pair’s Back

AUD/USD currency pair has drawn back on the corrective pullback it once had by falling back to 0.6900 after the reduced retail sales as well as industrial production from China. The reports for the month of April coupled with initial news from China and the lack of encouraging developments from Asia all weighed heavily on the pair.

That said, the pair fell to a new intraday low in the area of 0.6910 as of press time during the Asian session on Monday. The retail sales from China fell to -11.1%, over the -6.0% that was in the forecast and -3.5% that was actually expected. But the industrial production growth was also negative at -2.9% in comparison with the 7.0% that was expected of it.

AUDUSD price chart. Source TradingView

Earlier on Monday, the People’s Bank of China had announced that the rate for Medium-Term Lending for a year would remain unchanged at about 2.85%. Even though the market generally expected that the rate would not be changed, the fourth consecutive month of inactivity from the bank became a source of concern to AUD/USD traders recently. 

Chinese People to Still Work from Home

In the same vein, news over the weekend suggested that Beijing has put out guidelines for people to work from home in four districts, which include Chaoyang, the heavyweight district. The country’s powerhouse had initially declared a sit-at-home for three days for residents so they could get tested. In addition, the information that there are still restrictions on activities in Shanghai in spite of the fact there is no COVID outside the quarantine area, equally poses a challenge to the AUD/USD currency pair.

It should be noted that the reduced print in the Michigan consumer sentiment report for May that came in on Friday, aided the pair’s recovery from a low point of two years. The reduced report was supported by statements from the Chairman of the Federal Reserve, Jerome Powell. 

The lack of significant updates from there over the weekend seems to have halted the activities of buyers of the pair recently. Much more, escalating political dynamics in Ukraine come together with the plans of the European Union to impose more sanctions on Russia. This puts more weight on market sentiment and applies further pressure on the pair.

General inflation and the slow pace of economic growth equally challenge the market’s mood, especially as a result of China’s COVID crisis, the war in Ukraine, and aggressive monetary policies from major central banks. In the midst of these all, the S&P 500 Futures showed an average loss following the benchmark rally on Wall Street.

Furthermore, the ten-year Treasury yield of the US tried to prolong its recovery from Friday while the bond’s coupon oscillated close to 2.95% as of press time. AUD/USD traders are expected to watch out for risk catalysts, especially with regard to Russia and China, for new momentum.

Previous Article
Next Article

Leave a Reply

Your email address will not be published. Required fields are marked *