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Australian Dollar US Dollar (AUD/USD) Exchange Rate Jumps as Chinese Industrial Production Rockets

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Surge in Chinese Factory Output Prompts AUD/USD to Soar

The Australian Dollar US Dollar (AUD/USD) exchange rate pushed higher on Wednesday as markets reacted to China’s latest industrial production figures

At the time of writing AUD/USD has appreciated by around 0.3%, leaving the pairing close to a two week high.

Australian Dollar’s (AUD) Rises Following Upbeat Chinese Data

The Australian Dollar punched higher against the US Dollar on Wednesday as some upbeat economic data helped to fuel a sharp rise in market risk appetite.

According to data compiled by China’s National Bureau of Statistics, domestic factory output surged from 6.2% to 7.2% in January/February, easily outpacing expectations of a modest decline to 6.1%.

This saw output rise at its fastest pace since June as was mostly driven by output for steel, coal and cement.

Markets are hopeful that increased production in China will see an uptick in demand for raw materials, with Australian exports such as iron ore likely to benefit in particular.

US Dollar (USD) Weakens as Retail Sales Fall for Third Consecutive Month

Meanwhile the US Dollar struggled to hold off the ‘Aussie’s advance on overnight on Wednesday, following the release of the latest US retail sales figures.

According to data published by the US Commerce Department US retail sales declined 0.1% in February, the third consecutive decline in sales and missing expectations that sales growth would rebound to 0.3%.

The latest decline in sales appeared to be driven by falling demand for cars and fuel as well as falling sales for large ticket items such as furniture, electronics and appliances.

This suggests that after spending big in the fourth quarter, consumers are taking a bit of a breather at the start of 2018, especially as subdued wage growth likely hamstrings purchasing power.

AUD/USD Forecast: RBA to Maintain Dovish Tone in Bulletin?

Looking ahead the AUD/USD exchange rate may retreat on Thursday as the Reserve Bank of Australia (RBA) publishes its latest quarterly bulletin.

Analysts predict the latest economic assessment from the bank will see it maintain its broadly dovish outlook, something that may weigh on the Australian Dollar during Thursday’s session.

However the release of the latest US consumer sentiment index at the end of the week’s session could quickly see the US Dollar relinquish any gains as economists forecast that sentiment will have slipped in March.