AUD/USD: Under pressure around 0.6900 with eyes on statistics from China

• AUD/USD extends losses amid the broad USD strength, cautious trading ahead of the key data from the largest customer.
• The market’s excitement for the phase-one deal failed to last long as the US-China trade pact has hidden fears.

AUD/USD trades around 0.6900 amid the early Friday morning in Asia. The pair came under pressure on Thursday after the US dollar (USD) registered broad gains on the back of upbeat data at home. Also weighing on the pair were doubts over the future of the US-China trade relations as the phase-one deal doesn’t solve all the disputes between the global giants.

The US isn’t immune to mixed signals…

The upbeat performance of the US Retail Sales and regional manufacturing indices helped the greenback to recover some of its earlier losses the previous day. However, recently published GDPNow from the Atlanta Fed seems to dim the prospect of upbeat US performance as the Q4 prediction softens to 1.8% from 2.3% earlier forecast.

Fear of the US-China trade war is still present…

The US and China signed the much-awaited trade deal after years of arguments that weighed on market sentiment. However, nothing major has changed yet. Fears of the fresh trade war can’t be turned down as conditions marked in the deal are forcing China much more than the US. This makes the Wall Street Journal say that the US-China deal could upend the way nations settle disputes.

Even so, trade sentiment stays mostly upbeat with the US 10-year treasury yields and Wall Street portraying risk-on mood.

Markets will now concentrate on the headline data from Australia’s largest customer China. The fourth quarter (Q4) GDP, December month Retail Sales and Industrial will be the key to forecast near-term Aussie moves ahead of the February month’s monetary policy meeting by the Reserve Bank of Australia (RBA).

Ahead of the release, Westpac says, “China GDP for Q4 is today’s key release (1 pm Syd/10 am local). Annual growth is expected to print at 6.0%yr, in line with the Q3 result. This will leave year-average growth at the low-end of authorities’ 6.0-6.5% target for 2019. The detail on investment and consumption will be key and monthly data for December will provide additional context. Of the December data, we will be most interested in industrial production, with consensus 5.9%yr vs 6.2%yr in November.”

Technical Analysis

Despite failing to cross 21-day SMA level around 0.6930, AUD/USD prices stay beyond 200-day SMA, at 0.6887 now, which in turn signals choppy moves ahead.