AUD/USD remains pressured below 0.7300 on mixed data from Australia, China
- AUD/USD stays on the bearish consolidation mode as preliminary Australia Retail Sales contrast China Industrial Profits.
- Australia Retail Sales recovered -1.7%, China Industrial Profits eased in August.
- Market sentiment dwindles amid mixed concerns over China, US stimulus and debt limits.
- Fed Chair Powell’s prepared remarks renew tapering concerns, actual testimony, risk catalysts eyed.
AUD/USD stays on the back foot around 0.7270, down 0.20% intraday during early Tuesday. In doing so, the Aussie pair struggles to cheer positive data at home amid downbeat sentiment and softer economics from the largest customer China.
The preliminary readings of Australia Retail Sales for August improved from -2.7% prior and -2.5% expected to -1.7%. However, China's Industrial Profits eased to 10.1% YoY versus 16.4% expected.
In addition to mixed data from Australia and China, the sluggish mood in the market also contributes to the AUD/USD pair’s latest weakness.
Goldman Sachs cuts China's GDP while the Wall Street Journal (WSJ) hints at a new threat to the chip shortage, namely power cuts in Beijing. Following that, the World Bank said, per Reuters, “Economic recovery in east Asia and Pacific faces a setback,” while revising down China’s GDP to 8.5% for 2021.
On the same line were mixed concerns over US stimulus and debt-limit talks. Although US Treasury Secretary Janet Yellen pushed for swift address to the debt limit issue, the Senate’s failures to advance a measure to suspend the federal debt ceiling and avoid a partial government shutdown, per Reuters, question the market optimists. Following that, US Senate Democratic Leader Chuck Schumer said that Democrats will take further action this week to avoid a government shutdown and debt default. Elsewhere, House Speaker Nancy Pelosi showed optimism to tackle the deadlock of the US infrastructure stimulus bill the previous day but hinted at a lesser figure than President Joe Biden’s $3.5 trillion push.
Elsewhere, Fed Chair Jerome Powell’s sustained push for tapering, per the prepared remarks for today’s testimony, also challenges the AUD/USD bulls.
Alternatively, weakness in the covid numbers at home and optimism towards reaching the 80% double-jab target in Australia seems to challenge the AUD/USD sellers. On the same line were chatters over economic recovery from the pandemic in the West as well as the UK’s readiness to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
While portraying the mood, which has a linear relation with the AUD/USD prices due to its risk barometer status, S&P 500 Futures drops 0.22% intraday whereas the US 10-year Treasury yields drop 0.5 basis points (bps) after refreshing the three-month high the previous day.
Although the risk-off mood weighs on the AUD/USD prices, bears are cautious amid the US and Chinese policymakers’ concerns over tacking the issues on hand. Further, the covid updates have been positive as well and may recall the buyers should the US dollar eases on today’s Fed Chair Powell’s testimony.
Technical analysis
Given the bearish RSI divergence, contrasting the AUD/USD rebound, the 200-DMA level surrounding the 0.7300 threshold and an eight-day-old descending resistance line at 0.7305 becomes the key hurdle for the pair to cross to convince the bulls. Meanwhile, pullback moves may be challenged by the recent trading range support near 0.7220 and the 0.7200 round figure.