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AUD/USD picks up bids near 0.7750 on strong China Retail Sales, Industrial Production

  • AUD/USD fades pullback from intraday high despite better-than-forecast China data.
  • Risk dwindles as Treasury yields consolidate gains around multi-month top.
  • US President Biden praised virtual summit with Asia-Pacific allies, Yellen rejects reflation fears amid mixed vaccine updates.
  • Biden’s speech can direct short-term traders ahead of this week’s FOMC.

AUD/USD defies the recent pullback from the day’s high while bouncing off 0.7756 after China released key data early Monday. Also favoring the quote could be the easing of the US Treasury yields and US dollar pullback.

China’s Retail Sales crosses 32.0% forecasts and 4.6% prior with 33.8% YoY figures for January. Further details suggest that Industrial Production also rallied in January from 7.3% prior and 30% expected to 35.1% YoY. Given the upbeat data from Australia’s largest customer, AUD/USD ticks up following the release.

Read: China’s Jan data dump: Retail Sales and Industrial Output beat estimates

Earlier in the day, RBA Governor Philip Lowe repeated his prior speech while ruling out reflation fears.

Read: RBA's Lowe: RBA to maintain policy support until employment, inflation goals met

Market sentiment remains mildly bid as US bond bears catch a breather after US Treasury Secretary Janet Yellen rejected reflation fears during her ABC interview. Also favoring the mood could be US President Joe Biden’s comments suggesting strong ties with Asia-Pacific friends, including Australia.

It should, however, be noted that AstraZeneca’s rejection in the Netherlands, until March 29, as well as cautious sentiment ahead of US Secretary of State Antony Blinken’s Asia visit test the mood.

Against this backdrop, S&P 500 Futures rise 0.30% whereas the US 10-year Treasury yield drops 2.1 basis points (bps) to currently around 1.614%. It’s worth mentioning that the S&P 500 refreshed its record top on Friday whereas the US 10-year Treasury yield rose to the fresh high since February 2020 on the same day as risks consolidated by the end of the week.

Looking forward, the Asian economic calendar doesn’t have any major data/events to take care of but the markets may remain cautious ahead of today’s US President Biden’s appearance on the ABC, up for publishing at 17:15 GMT.

Also read: Will the Fed calm us treasury market volatility?

Technical analysis

Unless breaking below 50-day SMA, currently around 0.7740, AUD/USD bulls can keep the 0.7800 on radars.

 

China Fixed Asset Investment (YTD) (YoY) came in at 35% below forecasts (40%) in January

China Fixed Asset Investment (YTD) (YoY) came in at 35% below forecasts (40%) in January
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China’s NBS: Economic recovery maintained in January-February

Following the release of the January-February activity numbers, China’s National Bureau of Statistics (NBS) released a statement, via Reuters, express
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