AUD/USD bounces off fortnight low on strong China data but bears keep reins below 0.7200

• AUD/USD bears took a breather around two-week low on upbeat China data.
• China’s Retail Sales, Industrial Production favored NBS to praise economic growth for the first two months of 2022.
• Market sentiment dwindles amid covid woes from Beijing, indecision over Russia-Ukraine crisis.
• Yields stay firmer around multi-day top, equities dwindle but commodities, DXY remains on the back foot.

AUD/USD consolidates intraday losses while taking a U-turn from the lowest levels in two weeks, marked before a few minutes. That said, the Aussie pair picks up bids to 0.7185 at the latest on upbeat data from the largest customer China during Tuesday’s Asian session.

China’s Retail Sales rallied 6.7% YoY in February, crossing 3.0% market forecasts and 1.7% prior. Further, the Industrial Production (IP) also rose past 3.9% expected and 4.3% previous readouts with 7.5% YoY readings. Following the release, China’s National Bureau of Statistics (NBS) said, “National economy recovered better than expectation in the first two months of 2022.”

Read: China’s Feb Retail Sales jump 6.7%, Industrial Output leaps 7.5% – big beat

Earlier in the day, the People’s Bank of China (PBOC) surprised marked by keeping the monetary policy unchanged.

Read: PBOC leaves its MLF rate unchanged, Chinese stocks selling off to lowest levels since 2016

However, escalating covid woes in China and indecision over the Moscow-Kyiv peace talks seem to challenge the AUD/USD buyers, due to its risk-barometer status.

With over 5,000 covid cases, China extends virus-led lockdowns in major cities. The latest one is near to the capital Beijing and hence raises market fears.

On the other hand, headlines from Ukraine have been promising as President Volodymyr Zelenskyy announced the restart of peace talks and his Adviser Oleksiy Arestovych hints at a peace agreement with Moscow by the latest May.

Elsewhere, hopes of the Fed’s 0.50% rate-hike during this week’s Federal Open Market Committee (FOMC) challenge AUD/USD buyers.

Against this backdrop, the S&P 500 Futures print mild gains while the US 10-year Treasury yields seesaw near the highest levels since July 2019, around 2.16% by the press time.

Moving on, risk catalyst will be important to watch for fresh impulse, with eyes on China and Russia-Ukraine crisis.

Technical analysis

A clear downside break of an upward sloping trend line from late January, around 0.7180 at the latest, joins bearish MACD signals to direct AUD/USD sellers towards the early January’s low near 0.7130 and the 0.7100 threshold.