AUD/USD suffers losses on strong US data, Chinese economic woes

• AUD/USD drops weighed down by strong US economy and China's weak GDP.
• US retail sales grow 0.6% monthly; Industrial Production up 0.1%, strengthening USD.
• Fed Governor Waller's cautious rate cut remarks and China's poor GDP, retail sales spike market uncertainty.

The Australian Dollar (AUD) plunges for the third consecutive day against the US Dollar (USD) on risk aversion following earlier data in the Asian session on China’s GDP. Besides that, robust economic data from the United States (US) accelerated the AUD/USD’s downtrend, and trades at 0.6534, down 0.76%

AUD/USD weighed by solid US Retail Sales, sponsoring a repricing of Fed’s rate cuts

Retail sales in the US exceeded analysts' forecasts in December, according to the US Department of Commerce. On a monthly basis, consumers continued to spend at a healthy rate, with sales topping at 0.6%, above forecasts of 0.4% and November’s data, while on an annual basis, increased by 5.6%, surpassing the previous month’s 4%.

The US Federal Reserve (Fed) recently announced that Industrial Production grew at a 0.1% MoM, exceeding forecasts for stagnation at 0%, while year-over-year figures rose by 1%, crushing November’s -0.4% drop. AUD/USD traders extended the pair’s losses, while the Greenback advanced 0.24%, as shown by the US Dollar Index (DXY) at 103.59.

Additionally, US Treasury bond yields continued to climb, reflecting that investors might have gone too far, pricing more than 150 basis points of rate cuts by the Fed for 2024. The latest comments from Fed Governor Christopher Waller, saying there’s “no reason to move as quickly or cut as rapidly as in the past,” kept investors in check despite supporting rate cuts if inflation indeed gets lowered.

Aside from this, China’s data shifted sentiment sour as GDP rose by a modest 5.2% YoY in December but missed forecasts of 5.3%. That, alongside not being as strong as expected, retail sales hit 7.4% from 8% estimates, worrying market participants as the country goes through a property crisis.

AUD/USD Price Analysis: Technical outlook

At the time of writing, the pair has fallen below the 200-day moving average (DMA) at 0.6580, which opens the door for further losses. However, buyers are capping the plunge near the 100-DMA at 0.6512, which, once a hurdle, would clear the path toward the 0.6500 figure. A breach of the latter would be the last nail in the coffin, with sellers having a clear shot of pushing the price toward the next major support at 0.6338, November’s 10 low. On the other hand, if buyers lift spot prices above the 200-DMA, they would have a shot at 0.6600.