THE TAKEWAY: Chinese Industrial profits declined further > Could weigh on Aussie exports, exerting pressure on RBA officials to adjust monetary policy > Australian Dollar declined
The Australian Dollar lost ground to the U.S. Dollar leading into the Chinese industrial profits data release which posted an accelerated decline from the prior month. In June, profits for the Chinese industry declined by 2.2%, marking a continuation in losses which began in late February of this year. July was no different, registering profit declines at -2.7 percent.
The strength of China’s industrial sector is important to Australian exports as China is a major importer of Aussie resources. If global demand for Chinese production continues to weaken, then it’s likely that industrial firms will reduce the amount of goods ordered from Australia to meet changing needs. This of course should likely weigh on the Aussie economy where policy officials may be prompted to adjust lending rates accordingly. Looking forward, the RBA is scheduled to meet on September 4, where officials would have the opportunity to adjust their monetary policy stance accordingly.
AUD/USD, 1 Minute Chart
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