Australian Dollar remains stronger following China’s economic data
AUD/USD extends its gains for the second successive day, trading around 0.6980 during the Asian hours on Wednesday. The pair holds gains as the Australian Dollar (AUD) remains stronger following the release of key economic data from China, Australia’s close trading partner.
China’s economy expanded 0.9% quarter-on-quarter in the second quarter of 2026, slowing from the 1.3% growth recorded in Q1 but matching market consensus. Gross Domestic Product (GDP) grew by 4.3% month-over-month in Q2, down from a 5.0% expansion in the previous quarter. This annual figure missed Wall Street expectations, coming in softer than the market consensus forecast of 4.5%.
China’s annual June Retail Sales rose by 1.0% versus -0.1% expected and -0.6% prior. Industrial Production came in at 5.3% versus the 4.6% estimate and May’s reading of 4.5%. Meanwhile, the Fixed Asset Investment dropped 5.7% year-to-date (YTD) in June vs. a fall of 4.9% expected and a decline of 4.1% in the previous reading.
Additionally, the AUD/USD pair gains ground as the US Dollar (USD) struggles following softer-than-expected US inflation data, which fueled hopes that the US Federal Reserve (Fed) might adopt a less hawkish monetary stance.
The US Consumer Price Index (CPI) inflation eased to 3.5% year-over-year in June, dropping from a three-year high of 4.2% in May and coming in well below the market consensus of 3.8%. On a monthly basis, headline CPI actually declined by 0.4% in June, a notable shift from the 0.5% increase recorded in May.
Meanwhile, Fed Chair Kevin Warsh reiterated the central bank’s commitment to restoring price stability during congressional testimony on Tuesday but refrained from signaling a more aggressive policy stance.
However, while renewed tensions between the US and Iran drive up oil prices, inflation concerns remain firmly on investors' radars. The CME FedWatch Tool indicates that markets are now pricing in a roughly 50% chance of a Federal Reserve rate hike in September.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
10-year US Treasury yields approach 5%, US stocks pull back: Goldman Sachs remains bullish against the trend—an “insurance-rate hike” or the restart of the tightening cycle?
This week, the biggest suspense in the Federal Reserve meeting may no longer be whether there will be a rate hike.
Australian Dollar declines to near 0.7150 as hot US inflation data boost case for Fed rate hike
The AI super bull market still has room for imagination, but Wall Street has quietly prepared "two types of insurance": to guard against slow declines eroding returns, as well as to protect from sudden crashes.
Due to rising interest rates and oil prices causing the stock market rally to stall, investors are divided—some worry about a rapid sell-off, while others are concerned about a slow market decline. Some traders have become more creative with bearish strategies, such as buying put options on the Chicago Board Options Exchange Volatility Index or the S&P 500, or using double binary options to bet on a gradual price drop.
Crypto prices
More
