China data dump mixed and fails to move the needle ahead of the Fed

A series of Chinese data has been released for the month of November. This includes Industrial Production (power outages and supply issues remain as headwinds) and Retail Sales as the most-watched features of the data dump. 

The results come as follows:

  • China November Retail Sales +3.9 pct YoY (Reuters poll +4.6 pct).
  • China Nov. Industrial Output up 3.8% YoY (Reuters poll +3.6 %).

FX implications

The data was mixed and has had no impact on the forex market with the Aussie stationary near 0.7110 around the release. 

Meanwhile, the softer-than-expected fixings continue as the central bank attempts to slow CNY rise, (USD/CNY fix: 6.3716 vs the prev fix of 6.3675).

The Federal Reserve meeting will be the next key catalyst for the yuan and Aussie:

The chart above is an hourly analysis of AUD/USD which illustrates a bias to the downside while below 0.7150. 

About the Chinese data

Industrial output is released by the National Bureau of Statistics of China. It shows the volume of production of Chinese Industries such as factories and manufacturing facilities. A surge in output is regarded as inflationary which would prompt the People’s Bank of China would tighten monetary policy and fiscal policy risk. Generally speaking, if high industrial production growth comes out, this may generate a positive sentiment (or bullish) for the CNY, whereas a low reading is seen as negative (or Bearish) for the CNY.

The Retail Sales report released by the National Bureau of Statistics of China measures the total receipts of the retailed consumer goods. It reflects the total consumer goods that the various industries supply to the households and social groups through various channels. It is an important indicator to study the changes in the Chinese retail market and reflecting the degree of economic prosperity. In general, A high reading is seen as positive (or bullish) CNY, while a low reading is seen as negative (or bearish) for the CNY.