AUD/USD is trading lower as the market reacts to Chinese industrial and retail numbers. Early on Monday, data by the National Bureau of Statistics showed that Chinese industrial production grew by 9.8% in April compared to March’s 14.1% YoY. Notably, the figure matched economists’ estimates. On a year-to-date basis, the presented 20.3% was still lower than the prior month’s 24.5%.
At the same time, Chinese retail sales have missed the estimated 24.9% YoY by coming in at 17.7%. The figure is also lower than March’s 34.2%.
Notably, China is Australia’s top partner in two-way trading. Indeed, it accounts for about 29% of Australia’s global trades. For instance, 60% of the iron ore used in the manufacturing of steel in China originates from Australia. As the largest consumer of coal in the world, it also imports the commodity from Australia. As such, lower-than-expected industrial and retail figures from China are impactful on AUD/USD. Besides, investors are still digesting the fall of iron ore price by 9.5% late last week, after it had soared by 10% earlier in the week.
AUDUSD Technical Outlook
At its current 0.7753, AUD/USD is finding support along a crucial resistance-turn-support level of 0.7750. On a 4-hour chart, it is trading along the 14-day EMA and slightly below the 28-day EMA. I expect the current pair to rebound to 0.7815, where it will complete the head-and-shoulder pattern. However, in line with the bearish pattern, it may then drop to trade along the neckline at 0.7700.
On the flip side, AUD/USD may fail to gather enough momentum to move past 0.7790. If that happens, it may drop further to find support at 0.7700.
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