The Australian Dollar at risk ahead of Chinese data
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The Australian Dollar (AUD) traded slightly lower on Friday, below 0.6650 against the US Dollar (USD), losing 0.15% over the session. Caution dominates trading ahead of the weekend as traders await Monday’s release of key Industrial Production and Retail Sales data from China, Australia’s main trading partner. This Forex session is thus marked by contained volatility on the AUD/USD, in contrast to Thursday’s session, which was shaken by US inflation data. If the Chinese data disappoint on Monday, they could rekindle concerns about Chinese demand for raw materials, a historic driver of the Australian Dollar, and prompt investors to reduce their exposure to the AUD. The Chinese economy: Driving force or brake for the Aussie? Australia’s economy is structurally linked to that of China, the country’s biggest customer for iron ore, coal and natural gas exports. As a result, Chinese macroeconomic data, particularly industrial production, are closely followed by Forex investors. For August, the consensus is for annual Industrial Production growth of 5.8%, up slightly on July’s 5.7%. On the consumer front, Retail Sales are expected to rise by 3.8% YoY after 3.7% the previous month. While these figures appear correct on the surface, they mask a weakened momentum. As Christine Peltier of BNP Paribas notes, “the battle against deflation is far from won” in China. Weaker industrial indicators could accentuate doubts about the robustness of Chinese domestic demand. This would have a direct impact on Australia’s growth prospects by reducing export volumes, commodity prices and, consequently, mining revenues. There is then a close link between Chinese statistics and the trajectory of the Australian Dollar. The lingering shadow of Chinese deflation Despite Chinese GDP growth of 5.3% in the first half of the year, recent signs point to a loss of momentum. In July, Industrial Production growth fell to 5.7%,…
Filed under: News - @ September 12, 2025 7:25 pm