- The Australian Dollar shed a bit of its earlier gains after some Chinese data misses
- Industrial production was the standout,rising 6% in August against the 6.6% forecast
- Retail sales figures also missed, but by much less
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The Australian Dollar was preoccupied with a blockbuster employment report from its own country Thursday to pay too much attention to a patchy Chinese August data dump.
Industrial production was the standout loser. It rose by 6% on the year, much below the 6.6% markets had expected. August retail sales rose 10.1% on the year, strong enough but below the 10.5% median forecast. For the year to date they rose by 10.4% however, matching projections. A rise of 7.8% in fixed assets also came up short. The markets had hoped for an 8.2% gain.
That these fairly strong numbers should miss expectations perhaps illustrates how used investors have become to quietly upbeat data out of the world’s number-two economy this year. Whether any of these misses form the start of a trend must of course remain to be seen.
The AUD/USD pair can act as the markets’ liquid China proxy on the strength of Australia’s strong commodity export links with China. Sure enough, it slipped back a little after the China data but it clung to most of its earlier, domestically inspired gains.
Like many currencies, the Australian Dollar has slipped against a generally resurgent greenback this week. However, it remains very close to two-year highs, and that’s a position with which the RBA has repeatedly said it is uncomfortable.
RBA monetary policy member Ian Harper said this week that domestic growth remained too weak for a near term intertest rate rise, presumably despite the economy’s strong job creation which has been a feature for nearly a year. Australian interest rates remain at a 1.50% record low, with no change thought likely by futures markets until the latter half of next year.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX