Disappointing Chinese statistics put pressure on the Australian dollar
The pressure resurfaced on the Australian dollar following the very disappointing Chinese economic statistics published on Monday. Retail sales rose just 2.7% year on year (est. 4.9%) and industrial production 3.8% (est. 4.3%) while home sales fell 28 .6%, real estate investment by 12.3% and crude steel production by 6.4%.
As the Chinese economic situation is darker than expected due to the unprecedented real estate crisis and Xi Jinping’s “zero contamination” policy, cyclical assets and those most exposed to the Chinese economy are naturally the most affected. Australia being an important trading partner of China and one of the few countries to have a positive trade balance with the Asian giant, the Australian dollar is inevitably impacted by the Chinese slowdown. Especially since Australia mainly exports raw materials used by the real estate sector in crisis.
A continuation of the downtrend in AUD/USD seems the most likely scenario over the next few months as the global economic outlook is more likely to be revised down than up due to the persistence of headwinds in Europe (energy crisis) and China (real estate crisis and health policy).
AUD/USD daily price chart – key levels