AUD/USD slipped to $0.8748 and still has January lows of $0.8660 in sight. While most of the activity is likely to be on the USD side this week, AUD moves will be pinned on commodities and China. China released industrial profits on Saturday and it was a shocking number, down 0.6% for August when the previous reading was +13.5%. China’s official PMI reading is due out on Wednesday and, after the HSBC reading showed some improvement, this will perhaps be a positive as well.
However, there will be plenty of scepticism and, with protests kicking off in Hong Kong, risk is likely to be on the back foot in Asia. I continue to favour selling the AUD into strength, with initial targets to January lows. Any rallies back to $0.8800 are likely to be used as an opportunity to sell. On the local calendar this week we have retail sales, building approvals and trade balance data as the key readings.