AUD/USD retreats from intraday high but stays positive for the second consecutive day. China Industrial Profits drop 3.6% during January-November period, easing Covid restrictions keep sentiment positive. Mixed US data weighs on hawkish Fed bets, US Dollar during holiday-thinned markets. AUD/USD pares intraday gains around 0.6750 during Tuesday’s sluggish morning in Europe. In doing so, the Aussie pair takes clues from the recently flashed downbeat China data. However, cautious optimism in the market joins the receding hawkish bias from the Federal Reserve (Fed) to keep the pair buyers hopeful.
China’s Industrial Profits dropped 3.6% during the January-November period versus -3.0% prior. It’s worth noting, however, that the People’s Bank of China’s (PBOC) heavy liquidity injections keep the market sentiment firmer despite the downbeat data. That said, the Chinese central bank injected the most funds in two months during the last week. On a broader front, China scrapped the COVID quarantine rule for inbound travelers starting from January 08. The nation’s National Health Commission also mentioned “China's management of COVID-19 will also be downgraded to the less strict Category B from the current top-level Category A.”
Other than the risk-positive catalysts from China, softer US data also helps AUD/USD to remain on the buyer’s radar. US Core Personal Consumption Expenditures (PCE) Price Index, mostly known as the Fed’s favorite inflation gauge, matched 4.7% YoY forecasts for November versus 5.0% prior. Further, the Durable Goods Orders for the said month marked a contraction of 2.1% compared to -0.6% expected and 0.7% previous readings. More importantly, the Nondefense Capital Goods Orders ex Aircraft marked improvement of 0.2% compared to 0.0% expected and 0.3% revised down prior. Additionally, the Federal Reserve (Fed) Bank of Atlanta’s GDPNow tracker rose to show +3.7% annualized growth for the fourth quarter (Q4) versus +2.7% previous estimates.