When is China’s retail sales and industrial production release and how could it affect the AUD/USD?

Early Wednesday sees the annualized figures of April month retail sales and industrial production from the National Bureau of Statistics of China at 02:00 GMT. Investors would emphasize more on the data considering the latest swing of the dragon nation’s economics.

Retail sales growth is expected to have softened to 8.6% year-on-year against 8.7% reported prior whereas industrial production is seen following recent macro weakness with 6.5% YoY figure versus 8.5% previous.

Ahead of the release, analysts at Westpac say,

China releases April activity data: industrial production, retail sales and fixed asset investment (12pm Syd/10am local). We tend to focus on IP, which was much stronger than expected in March, up 8.5%yr. This was a high since 2014, after late 2018 readings below 6%, the slowest since the GFC. April should see a reading somewhere in between, with consensus 6.5%yr.

Analysts at TD Securities also came up with their forecasts about the data and said:

Following a sharp slowdown in H2 18, the March retail sales reading revealed a stronger than expected bounce back of 8.7% y/y. There was a similar pattern for industrial production which also jumped in March to 8.5% y/y. Targeted monetary stimulus alongside tax cuts have clearly helped, but as seen by the pull back in the PMI and weaker April exports data IP is likely to slow in April to around 6.3% y/y, while retail sales are also likely to moderate to a 8.5% y/y pace.

How could it affect the AUD/USD?

Renewed trade spat with the US and failure to hold the previous recovery of headline manufacturing indices weigh on the Australian Dollar (AUD) as China is the largest trading partner of Australia.

Given the forecasts suggesting an overall soft data, the Aussie might remain under pressure after the announcement. 

While weak industrial production is on the cards and highlights January 2016 lows near 0.6830 for the AUD/USD pair, positive surprise can trigger the quote’s rally towards 0.6960 and 0.7000 nearby resistances.

Key Notes

AUD/USD: Buyers await Australia/China data to validate recent recovery

AUD/USD Analysis: Chinese data to deter whether the pair could lose the 0.6900 level

About China's industrial production data

Industrial output is released by the National Bureau of Statistics of China. It shows the volume of production of Chinese Industries such as factories and manufacturing facilities. A surge in output is regarded as inflationary which would prompt the People’s Bank of China would tighten monetary policy and fiscal policy risk. Generally speaking, if high industrial production growth comes out, this may generate a positive sentiment (or bullish) for the CNY (and AUD), whereas a low reading is seen as negative (or Bearish) for the CNY (and AUD).

About China's retail sales data

The Retail Sales report released by the National Bureau of Statistics of China measures the total receipts of the retailed consumer goods. It reflects the total consumer goods that the various industries supply to the households and social groups through various channels. It is an important indicator to study the changes in the Chinese retail market and reflecting the degree of economic prosperity. In general, A high reading is seen as positive (or bullish) CNY, while a low reading is seen as negative (or bearish) for the CNY.