AUD/USD declines towards 0.7100 on disappointing Chinese data

AUD/USD falls toward 0.7100, down 0.08% intraday to 0.7120 at press time, as China's weaker-than-anticipated data dump adds to the cautious market sentiment during Monday's Asian session. The Reserve Bank of Australia (RBA) and the Federal Reserve's (Fed) Minutes of their most recent monetary policy meeting may be causing investors to be on edge (Fed).

China's Retail Sales down to 2.7% from 5.0% anticipated and 3.1% previously, while Industrial Production (IP) decreased to 3.8% from 3.9% previously and 4.0% market expectations.

The People's Bank of China (PBOC) reduced the one-year medium-term lending facility (MLF) rates by 10 basis points (bps) earlier in the day in an effort to repel bears. Moreover, the market confidence was bolstered by better-than-expected GDP growth figures for Japan. However, the rising number of US lawmakers visiting Taiwan in conjunction with US House Speaker Nancy Pelosi's trip to Taiwan challenges the sentiment around Sino-American relations.

Away from the United States, weaker readings of the Consumer Price Index (CPI) and the Producer Price Index (PPI) helped to calm the market's inflation anxieties. However, Thomas Barkin, president of the Richmond Federal Reserve (Fed) Bank, stated on Friday that he intends to increase interest rates further in order to bring inflation under control. According to Reuters, Barkin told CNBC, "I'd prefer to see a period of persistent inflation control, and until that occurs, I believe we will have to raise rates into restrictive zone." President Mary Day of the Federal Reserve Bank of San Francisco, President Neel Kashkari of the Federal Reserve Bank of Minneapolis, and President Charles Evans of the Federal Reserve Bank of Chicago were also among the Fed hawks who continued to advocate for higher interest rates.

Having observed the early market reaction to China's monthly data dump, AUD/USD traders should focus on the August NY Empire State Manufacturing Index, which is anticipated to be 8.5 versus the prior reading of 1.1. Although weaker US PMI data could pressure the AUD/USD bulls, the downside remains illusive ahead of Tuesday's RBA Minutes, Wednesday's Australia Wage Price Index for the second quarter, and Thursday's Australian jobs report. In addition to the RBA Minutes, news on China and U.S. relations will delight Aussie pair traders.

The 200-day simple moving average restricts immediate AUD/USD gains around 0.7120, which combines with a slow RSI at the upper end to suggest that AUD/USD bulls are tiring. As of press time, the downward moves remain elusive until the price stays above the last resistance line from late April, 0.6990.