• The Australian Dollar drops further against its peers after China’s data release.
• On an annualized basis, China’s Retail Sales declined 0.6%, while Industrial Production rose by 4.5%.
• Investors await the RBA monetary policy in which it is expected to leave the OCR steady at 4.35%.

The Australian Dollar (AUD) faces further selling pressure against its major currency peers during the Asian trading session on Tuesday, sliding 0.16% to near 0.7060 against the US Dollar (USD). The Aussie pair was already under pressure since the beginning of Tuesday’s session after a three-day upside move, and has dropped after the release of the weak China data.

Given that the Australian economy relies heavily on its exports to Beijing, economic data from China carries significant influence on the Australian Dollar.

The National Bureau of Statistics of China has reported that Retail Sales declined by 0.6% Year-on-Year (YoY) in May, while they were expected to remain flat after rising 0.2% in April. Fixed Asset Investment YoY contracted at a faster pace of 4.1% vs. -2% and the prior reading of -1.6%.

China’s Industrial Production data has come in stronger at 4.5% against 4.3% estimates and the previous release of 4.1%.

Meanwhile, investors brace for high volatility in the antipodean as the Reserve Bank of Australia (RBA) is set to announce its monetary policy at 04:30 GMT, in which it is expected to leave its Official Cash Rate (OCR) steady at 4.35%.

This will be the first RBA’s monetary policy this year, when it is expected to leave interest rates unchanged. So far this year, the RBA has raised its OCR by 25 basis points (bps) in all three policy meetings to tame higher inflationary pressures in Australia.

Investors will pay close attention to the RBA’s guidance regarding the monetary policy outlook, at times when the Australian Consumer Price Index (CPI) has started showing signs of cooling down, and employment conditions appear to be worsening.

In April, Australia’s CPI arrived lower at 4.2% Year-on-Year (YoY), missed 4.4% estimates, and the prior reading of 4.6%. The Unemployment Rate jumped to 4.5% from expectations and the previous reading of 4.3%.