AUD/USD Slides Toward 0.7150 on Weak China Data and Rising Yields

Key Facts

The Australian Dollar weakened against the US Dollar, retreating toward the 0.7150 level after failing to sustain its recent upward momentum. According to reports from Crédit Agricole, the currency is facing significant headwinds from softer Chinese economic data and rising global bond yields. The bank noted that these factors are creating a difficult backdrop for the AUD, leading to a potential positioning unwind.

The downward pressure is exacerbated by disappointing figures from China, where New Yuan Loans plummeted to -10 billion in May, missing the 300 billion forecast by a wide margin per market data. As China is Australia's largest trading partner, this credit contraction signals weakening demand for Australian exports. Conversely, the USD remains resilient following US Retail Sales growth of 0.5% in May, which supports the narrative of higher-for-longer yields in the United States.