China looks set to dictate what direction the Australian dollar will move today

Clive Brunskill/Getty Images
  • The Australian dollar has fallen fractionally in early trade on Monday, a delayed reaction, of sorts, to soft Chinese monetary growth data released on Friday.
  • China will released a swathe of important economic data today, headlined by Q2 GDP.
  • US retail sales data will also be released. Donald Trump and Vladimir Putin will also meet in Helsinki.

The Australian dollar has opened the new trading week on the back foot, giving back some of the gains achieved late on Friday.

Here’s the scoreboard as at 7.40am in Sydney.

AUD/USD 0.7417 , -0.0006 , -0.08%
AUD/JPY 83.31 , -0.03 , -0.04%
AUD/CNH 4.9744 , -0.0044 , -0.09%
AUD/EUR 0.6345 , -0.0011 , -0.17%
AUD/GBP 0.5605 , -0.0003 , -0.05%
AUD/NZD 1.0964 , 0.0012 , 0.11%
AUD/CAD 0.9772 , 0.0007 , 0.07%

After climbing earlier in the day, the Aussie fell across the board in European trade following the release of soft Chinese monetary growth data for June, creating renewed concern about a slowdown in the Chinese economy.

“[The data showed] a further fall in M2 money supply growth — 8.0% year-on-year from 8.3% in May and 8.4% level expected — while the broad Aggregate Financing credit numbers showed expansion by a much weaker than expected 1.118 trillion yuan,” said Ray Attrill, Head of FX Strategy at the National Australia Bank (NAB).

“The overall message is that credit conditions are still tightening.”

After dipping to as low as .7370 on the news, the AUD/USD rebounded sharply in the latter parts of the session, seemingly taking its cues from a recovery in US stocks into the close.

It eventually closed the week at .7423, a gain of 0.22% for the session.

Investing.comAUD/USD Hourly Chart

Turning to the day ahead, the Aussie’s gyrations will once again be influenced by those in Chinese financial markets, especially with a swathe of important Chinese data releases set to be released during the session.

The headline act will be the Q2 GDP figure with the median economic forecast looking a year-on-year increase of 6.7%, down from 6.8% in the March quarter.

Of note, it’s now been several years since the GDP figure has come in below market expectations with the number either printing in line or 0.1 percentage points above consensus.

The GDP report will be released at midday AEST.

Arriving alongside the GDP report, China’s NBS will also release retail sales, industrial output and urban fixed asset investment figures for June.

From a year earlier, retail sales and industrial output are tipped to increase by 9% and 6.5% respectively. Urban fixed asset investment is also seen expanding 6% in the first half of the year compared to the same period in 2017.

In May, retail sales, industrial output and urban fixed asset investment grew by 8.5%, 6.8% and 6.1% respectively.

Given the busy Chinese economic calendar, the movements in the Chinese yuan will likely prove influential on the Aussie dollar, maintaining the theme seen over the past month.

Outside of Asia, other data highlights today include retail sales, business inventories and Empire State manufacturing index from the United States along with trade figures from the Eurozone.

US President Donald Trump will also meet his Russian counterpart Vladimir Putin in Helsinki.

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