Commodity Dollars Looking at Chinese Data for Direction

Since July, commodity dollars have been slipping lower as risk sentiment remains negative. A less dovish FED has helped turn the USD bullish by refusing to stop raising rates and after the recent data trades are anticipating a last 25 bps hike in November. Stronger economic statistics and indications have kept the USD supported, luring investors looking for a safe-haven currency, while commodity dollars have been suffering.

Besides this, there have been unforeseen bad developments in China’s economic environment, which have put pressure on risk assets. AUD/USD fell below 0.64, while NZD/USD dived below 0.68 as a result. The economic indicators from China continue to show weakness, so AUD and NZD traders are looking closely at reports coming from China, since they are directly linked by exports to the giant of manufacturing.

Today’s data from China beat expectations, which should lend some support to commodity dollars. They got a boost yesterday from the positive US data which improved the sentiment, so they’re looking bullish. We decided to open a buy signal in AUD/USD a while ago.

Chinese Industrial Production and Retail Sales Report for August

• Industrial Production YoY August 4.5% vs 3.9% expected
• Previous Industrial Production YoY was 3.7%
• Industrial Production YoY August 4.6% vs 3.0% expected
• Previous industrial production was 2.5%
• China Jan-Aug Fixed-Asset Investment +3.2% Y/Y (Reuters poll +3.3%)
• Jan-Aug Private Sector Fixed-Asset Investment -0.7% Y/Y
• Jan-Aug Infrastructure Investment +6.4% Y/Y
• August unemployment rate 5.2% (expected 5.3%, prior 5.3%)

Comments from the National Bureau of Statistics (NBS):

• In August, major indicators showed marginal improvement
• National economy showed good momentum of recovery
• Domestic demand remains insufficient

AUD/USD Live Chart