Monthly activity data from China was released during the Asian trading session and turned out to be mixed. This was the first monthly activity reading from China in 2023 and included year-to-date data for February, so for January and February combined. Industrial production missed expectations slightly, retail sales came more or less in-line with market expectations and urban investments beat expectations. While data came in mixed compared to expectations, a point to note is that all three metrics increased compared to year ago values. Small beat in retail sales data is welcome as Chinese authorities hinted they aim to leave fiscal spending more or less unchanged compared to 2022, meaning that domestic demand will be key in achieving goals set for 2023.
China, Monthly activity data for January-February period
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Industrial Production: 2.4% YoY vs 2.7% YoY expected
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Retail Sales: 3.5% YoY vs 3.4% YoY expected
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Urban Investments: 5.5% YoY vs 4.3% YoY expected
As it is usually the case, the Australian dollar moved following the release of Chinese data as China is a key trading partner for Australia, especially when it comes to commodities exports. Taking a look at AUDJPY at D1 interval, we can see that the pair jumped earlier today (orange circle) but has since erased all of the gains and turned lower. A point to note is that today's upward move could be seen as an attempt to break back above the lower limit of a recently broken upward channel. Attempts to climb back above this hurdle were made today, yesterday and on Monday and failed on all three days, suggesting that resumption of declines may be on the cards.
Source: xStation5
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