It’s going to be a big session for the Australian dollar, with markets awaiting the release of key economic data out of China, including Q2 GDP.
One way or another, it’s likely to be market moving.
According to David de Garis, senior economist at the National Australia Bank, there’s likely to be just as much attention on the monthly data that accompanies the GDP report — fixed asset investment, industrial output and retail sales — given the knack of the economic growth figure tending to come in around market expectations.
“China focus will be on Q2 GDP, a release that usually comes in pretty close to expectations if not bang on, today’s annual growth (the one to focus on rather than the more volatile and experimental quarter to quarter estimates) is expected to ease back from 6.7% 6.6%,” says de Garis.
“Of equal importance will be the tone of the three activity releases for June, industrial production, retail sales and fixed assets investment. The market will be also interested in some of the detail of these reports and what they suggest about residential construction, infrastructure investment generally, and consumer spending,” he says.
For those looking for further information before the data deluge hits, this 10-second guide will help bring you up to speed.In overnight trade, the AUD/USD pushed higher, boosted by strength once again in US and European stocks and a robust June jobs report released earlier in the session.
The AUD/USD eventually closed Thursday’s session buying .7628, a figure that it will likely continue to oscillate around in early trade in Asia.
According to Elias Haddad, senior economist at the Commonwealth Bank, should the China data come in around market expectations, it could see the Aussie push even higher in the second half of Asian trade.
“In our view, drags from the service industry are forecast to see China’s GDP growth slow to an annual pace of 6.6% in Q2 from 6.7% the previous quarter,” says Haddad. “This type of result, combined with the prospect for more accommodative global fiscal and monetary policies can push AUD/USD higher towards 0.7650-0.7700 in the short-term.”
That’s not an unrealistic view given sentiment across markets at present. Good data is being perceived to be good news for risk assets, including the Aussie, while bad data is also being seen as risk positive as it increases the odds of further monetary and fiscal stimulus being delivered.
Should that sentiment hold true in Asia, it suggests that the risks heading into the Chinese data are skewed to the upside.
The China data will arrive at 12pm AEST.
Here’s the current Aussie dollar scoreboard, as at 7.55am AEST.
- AUD/USD 0.7626 , -0.0002 , -0.03%
- AUD/JPY 80.32 , -0.02 , -0.02%
- AUD/CNH 5.1022 , -0.0022 , -0.04%
- AUD/EUR 0.6857 , -0.0001 , -0.01%
- AUD/GBP 0.5725 , 0.001 , 0.17%
- AUD/NZD 1.0599 , 0.0012 , 0.11%