AUD/USD falls to about 0.6650 following weaker-than-expected data from China.

Market Update: Australian Dollar Shows Weakness Amid Chinese Data

In Asian trading on Monday, the AUD/USD pair slipped 0.10% to approximately 0.6645. The Australian dollar is facing pressure following the release of unexpectedly weak retail sales and industrial production figures from China’s National Bureau of Statistics for November.

Australia’s economy relies heavily on exports to China, so shifts in Chinese economic indicators significantly sway the Australian dollar (AUD).

Chinese retail sales only increased by 1.3% year-on-year in November, falling short of the anticipated 2.9%. Meanwhile, industrial production showed a slight decline to 4.8%, down from October’s 4.9%. Analysts had expected an uptick to 5% in factory output.

The AUD has been adjusting over the past couple of trading days after disappointing labor market data released for November. Employment figures revealed a loss of 21,300 jobs, while the forecast suggested an addition of 20,000 jobs, raising doubts about the labor market’s robustness.

On a broader scale, the outlook for the Australian dollar remains relatively solid, as the US dollar struggles to gain ground. This is largely due to expectations that the Federal Reserve may cut interest rates by 2026, a view that came into sharper focus after last week’s policy meeting. The Fed’s dot plot indicated that officials foresee a decline in the federal funds rate to 3.4% by late 2026, suggesting only one rate reduction for the upcoming year.