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AUD/USD Rises Against 0.6430 Resistance On Stronger Australia Retail Sales And China Stimulus News
AUD/USD reestablishes intraday high while rebounding from one-week low after six consecutive weeks of decline. July Retail Sales in Australia are up 0.5% versus 0.3% expected and -0.8% previously. Australian Treasurer Chalmers expresses economic concerns regarding China ties. China's stimulus combines with the US Dollar's preparations for this week's top-tier inflation and employment data to spark a corrective rally.
After observing positive Australian Retail Sales, the AUD/USD pair increases by a half percent to around 0.6440 as it approaches the critical upside barrier. China's stimulus and the US Dollar's retreat ahead of this week's vital inflation and employment data could add to the Aussie pair's recovery.
In spite of this, Australia's seasonally adjusted Retail Sales for July increased 0.5% compared to 0.3% expected and -0.8% previously.
However, late on Sunday, Australian Treasurer Jim Chalmers signalled that he expects to see significantly weaker Australian growth due to higher interest rates from the Reserve Bank of Australia (RBA) and China's decline, which in turn encourages buyers of the Aussie pair.
Moreover, China's disappointing Industrial Profits and conflicting concerns regarding US-China trade talks in Beijing, as US Commerce Secretary Gina Raimondo visits the Dragon Nation, also contribute to the latest rebound in the AUD/USD pair.
Notably, however, weekend news from China implies the introduction of an additional measure to stimulate economic activity, namely the halving of the current 0.1% stamp duty on stock trading. In a similar vein, the Wall Street Journal (WSJ), citing sources familiar with the Chinese decision-making process, may report that Chinese Communist Party Chairman Xi Jinping has philosophical objections to Western-style consumption-driven growth, indicating the need for additional stimulus.
During the last six consecutive weeks, the AUD/USD pair was weighed down by hawkish Fed comments, concerns surrounding an Australian economic slowdown, and the RBA's dovish bias.
In this context, the benchmark 10-year Treasury bond yields snapped a four-week uptrend by posting modest weekly losses while retreating from the highest level since 2007, before posting a corrective bounce to 4.25 percent at the latest. Wall Street ended the previous day on a positive note, but S&P500 Futures struggle to establish clear directions.
Having observed the initial market reaction to the Australian data, AUD/USD pair traders will keep a watch on risk catalysts for fresh impulse prior to Wednesday's release of the Australia Monthly Consumer Price Index for July. In particular, Friday's official PMIs from China, the Federal Reserve's (Fed) preferred inflation gauge, namely the Core Personal Consumption Expenditures (PCE) Price Index for July, and the monthly employment data will be crucial for determining future trends.
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