AUD/USD slips to 4.5-month low, Westpac Consumer Confidence deteriorates

• AUD/USD has dropped to lowest since Jan.4. 
• Lingering trade tensions keep the AUD on the defensive. 
• Deteriorating Aussie consumer sentiment adds to the bearish pressure around the AUD. 

The AUD/USD pair has slipped to fresh 4.5-month low of 0.6927 ahead of China data. 

The currency pair ran into offers near 0.6950 earlier today and is currently trading at the lowest level since January 3, marking a bearish follow-through to Tuesday’s Doji candle. 

The decline could be associated with the 0.11% drop in S&P 500 futures seen at press time. The offshore Chinese yuan is also losing altitude, currently trading at 6.91, representing 0.13% gains on the day.

The Chinese yuan had picked up a bid on Tuesday following Trump’s positive comments on trade negotiations with China. The recovery from five-month lows, however, was short-lived. After all, China’s retaliatory tariffs have shattered the illusion that the two sides can reach a permanent trade truce. 

The global stocks, therefore, could resume the fall today, leading to a deeper drop in AUD/USD, possibly below 0.69 –  more so, as Westpac data released a few minutes before press time showed the consumer confidence has deteriorated in May. The index rose 0.6% in May, having rise 0.9% in April. 

The AUD, a proxy for China, will likely pick up a bid if China’s industrial production for April, due at 02:00 GMT, blows past expectations of a annualized 6.5% rise. Retail sales, also due at 02:00 GMT, are forecasted to rise 8.6% in April, following a 8.7% rise in March. 

Pivot levels