AUD/USD surges to 10-day high after China’s data dump

• China’s Industrial Production, Retail Sales and GDP (QoQ) grew past market expectations and propelled the Aussie to 10-day high.
• Trade tension between the US and China remains on the card despite the latest positive developments.
• US manufacturing gauge, trade/political news will be observed afterward.

With China’s headline economic data clocking better than forecast prints, AUD/USD surges to early-month high while trading near 0.7022 on early Monday.

China’s June month Retail Sales and Industrial Production cleared 8.3% and 5.2% expectations for yearly figures while clocking in 9.8% and 6.3% respective growth numbers. The Gross Domestic Product for the second quarter (Q2) of 2019 matched 6.2% forecast on a yearly basis but grew past 1.5% estimate to 1.6% on a QoQ format.

While upbeat prints of Retail Sales and Industrial Production initially please the Aussie buyers, because China is Australia’s largest customer, a GDP figure close to the lows of Chinese government’s 6.00 to 6.5% range keep buyers in check.

Be it the US Federal Reserve policymakers or members of monetary policy committees of the European Central Bank (ECB) and the Bank of England (BOE), everybody is favoring the easy monetary policy off-late. With this, investors seek gains in equities while also portraying an improvement in global risk sentiment, as shown by the recent uplift in the US 10-year treasury yield.

At the trade front, recent signs are positive to the US-China trade stalemate as the US is likely lifting its ban from selling equipment to China’s Huawei, noted by Reuters, whereas China is also considering to put its best trade negotiators on the front to break the present deadlock.

Moving on, investors will now await the US NY Empire State Manufacturing Index data for June whereas trade/political news can keep offering intermediate moves to the pair. The US manufacturing gauge is likely to recover earlier losses of -8.6 with +0.5% mark.

Technical Analysis

Even if overbought conditions of 14-bar relative strength index (RSI) on 4-hour chart triggered the Aussie pair’s pullback from 0.7030, 5-day long ascending trend-line around 0.7000 can keep the declines limited, if not then 0.6955/50 holds the key to the quote’s dip towards current month low nearing 0.6910. Meanwhile, 0.7030 and 0.7050 seem nearby resistances to clear ahead of aiming early-April month low near 0.7090.