TALKING POINTS – China, GDP, INDUSTRIAL PRODUCTION, RETAIL SALES, TRADE WAR
- Australian Dollar rose after a cascade of Chinese data
- Chinese economic indicators were better than forecasted
- AUD/USD still likely to face uphill battle throughout 2019
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AUD/USD along with Australian 2-year bond yields rose after Chinese industrial production data exceeded expectations, coming in at 5.7% year-on-year compared with 5.3% forecasted. Retail sales also outperformed with 8.2% growth, outpacing the 8.1% forecast. Year-on-year and quarter-on-quarter measures of GDP growth eased lower in line with analysts' consensus projections to 6.4% and 1.5%, respectively.
AUD/USD – 5-Minute Chart
The Aussie’s jump could be attributed to the fact that traders may have been expecting even worse results than forecasters suggested. This in large part would likely have to do with the trade war between China and the US, which investors might have been expecting to have had a bigger negative impact.
Looking ahead, the Australian Dollar still must face a potential hurricane of headwinds in 2019, particularly on the trade war front. Negotiations between Beijing and Washington may have hit a snag around concerns of intellectual property, a key issue for the Trump administration.
As a cycle sensitive currency, the Australian Dollar is vulnerable to changes in conditions for global growth. The upcoming World Economic Forum in Davos, Switzerland, may be a key event that traders are monitoring to gauge the level of optimism – or pessimism – experts have on global growth in 2019.
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--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter