AUD/USD: No response to horribly weak China data
- AUD/USD is seeing little action despite dismal China.
- Both industrial production and retail sales growth slowed in August.
- Risk-off may worsen due to China data, leading to a drop in the AUD.
China reported a horribly weak factory activity and consumer spending figures at 02:00 GMT. So far, however, that has failed to move the needle on the Aussie pairs. The AUD/USD pair continues to trade largely unaffected around 0.6872.
Chinese consumer spending, as represented by retail sales, rose 7.5% year-on-year in August, missing the expected figure of 7.9% by a big margin and down from the preceding month's print of 7.6%.
Industrial production growth also slowed to 4.4% in August, following a 4.8% rise in July. The markets were expecting a print of 5.2%.
The slowdown in factory activity is not surprising, given the US-China trade tensions re-escalated in August.
What's more concerning is that consumer spending is weakening and could lead to a deeper economic slowdown in the near future.
As a result, the already depressed risk assets (due to oil spike) may extend losses during the day ahead, keeping the AUD under pressure. As of writing, the futures on the S&P 500 are reporting a 0.65% drop.