AUD/USD Holds Steady Above 0.6400 After Mixed Chinese Data

AUD/USD Holds Steady Above 0.6400 Following Chinese Data Release

The AUD/USD pair remained steady at the beginning of the trading week, holding slightly above the 0.6400 level during Monday's Asian session. The pair struggled to find strong directional momentum, as traders weighed mixed fundamental signals from China and the United States.

On the one hand, the Australian Dollar (AUD) came under mild pressure due to a weaker risk tone and disappointing Chinese retail data. According to the National Bureau of Statistics (NBS), China’s Retail Sales grew 5.1% year-over-year (YoY) in April, falling short of the 5.5% forecast and down from 5.9% in March. This signaled a potential slowdown in Chinese consumer demand, which could affect Australia due to their close trade ties.

However, not all Chinese data was weak. Industrial Production in China grew by 6.1% YoY in April, beating the expected 5.5%, though it still marked a slowdown from the 7.7% recorded in the prior month. Meanwhile, Fixed Asset Investment rose by 4.0% in the year to date through April, slightly below expectations of 4.2%.

Despite soft retail figures, the US Dollar's ongoing weakness provided support to the Aussie. The Greenback remains under pressure following Moody’s recent downgrade of the US credit rating and a string of weak US economic indicators, which have increased the likelihood of Federal Reserve rate cuts later this year.

Looking ahead, all eyes are on the upcoming Reserve Bank of Australia (RBA) policy decision scheduled for Tuesday. Markets are speculating that the RBA could cut its benchmark interest rate by 25 basis points amid signs of easing inflation and global trade tensions. However, the recent détente in US-China trade relations has dampened expectations for more aggressive easing.

As a result, the AUD/USD pair continues to trade in a tight range, with market participants awaiting a clearer catalyst—potentially from the RBA or global risk sentiment shifts—to determine the next significant directional move.