AUD/USD pressured on key data

AUD/USD bulls move in to put the Aussie into the green for the day. China and recession worries flared up a flight to the US dollar. The AUD/USD pair has been pressured on Tuesday after weak global economic data, particularly in China, reignited global recession fears.

The safe-haven US dollar has benefitted in the forex space and it hit a one-week high while risk-friendly currencies such as the Australian dollar have taken the brunt. At 0.7027, AUD/USD is in the green by some 0.01%, after falling from a high of 0.7040 to mark a low of 0.6991 before recovering in midday US trade.

Fears of a significant slowdown of the Chinese economy put a dampener on the commodity markets and the Australian dollar received a blow due to lower demand for iron ore and other assets from China. Figures for Industrial Production, Retail Sales and fixed asset investments, as released by the National Bureau of Statistics, came in below expectations in July.

Worries about a more pronounced cooling rose from a surprising rate cut by the Chinese central bank PBoC. The unexpected move gave the impression that the PBoC is alarmed about the extent of economic weakening as it tries to revive credit demand to support the COVID-hit economy after a string of weak economic data releases for July. Australia’s close trade ties with China mean traders sometimes treat its currency as a liquid proxy for China’s yuan.