AUD/USD plunges to near 0.7350 on China retail sales slump

By on April 18, 2022 0
  • AUD/USD slipped below 0.7400 on poor retail sales data from China.
  • US 10-year Treasury yields hit a new three-year high of 2.88%.
  • The RBA minutes and the Fed’s Powell speech are the key events this week.

AUD/USD is experiencing a bloodbath on Easter Monday after slipping below the previous week’s low at 0.7392. The pair fell more than half a percent in the Asian session and is eyeing more weakness amid underperforming Chinese economic data.

China’s National Bureau of Statistics reported annual retail sales at -3.5%, significantly lower than the market consensus of -1.6% and the previous print of 6.7%. The Antipode is one of the main exporters to China and a fall in Chinese economic data has an impact on the Australian dollar. However, investors shrugged off the outperformance of China’s strong gross domestic product (GDP) numbers. Annual GDP for the first quarter of fiscal 2022 landed at 4.8%, well above estimates of 4.4% and the previous print of 4%.

Meanwhile, broader strength in the US Dollar Index (DXY) dampened Aussie demand. US Treasury yields are rising sharply given rising inflation and labor market tightening in the US economy. A multi-decade collective consumer price index (CPI) effort and a constant full employment level below 4% are optimal for a giant rate hike by the Federal Reserve (Fed). Yields on the 10-year US Treasury rose almost 2.3% in the Asian session, at press time and broke through the previous week’s high.

Going forward, Fed Chairman Jerome Powell’s speech will be the key event. However, investors will also focus on the release of the Reserve Bank of Australia (RBA) minutes on Tuesday.