AUD/USD About to Reverse Lower, as Australian Economic Data Remains Negative due to Lockdowns

The AUD/USD was one of the most bullish pairs for more than a year, since the coronavirus breakout in Europe, which saw it climb around 25 cents from the bottom. But, the climb ended earlier this year, after this pair reached the 100 monthly SMA, and the decline in the USD stopped, while in June we saw a bearish reversal.

But for about a week or so, the AUD/USD has been pulling back higher, after Powell and the FED tried to play down the prospects of rate hikes and tapering soon, which sent the USD lower. But, the AUD doesn’t have anything to run on, since the economic data keeps coming up negative, showing that the Australian economy is in a difficult position, as heavy restrictions and lockdowns continue in parts of the country. Retail sales have been declining since June, and today’s report showed another negative reading for July.

AUD/USD Live Chart

Australia Retail Sales Report for July

• July retail came at -2.7% MoM
• Expectations were at -2.6%
• June retail sales were -1.8%
• Retail sales YoY came at -3.1%, compared to July 2020

This is pretty bad, but a 5-mile travel radius in the main states of Australia will keep spending low, and most of the economic indicators have turned negative or really weak. As a result, the AUD should turn lower soon. The Australian dollar is not only bound to the Australian data, but also to the Chinese economy, since Australia exports large quantities of raw materials to China. Industrial production and manufacturing have cooled off considerably in China, are have now almost stagnated, which should weigh on the AUD as well.

China Industrial Profits for July