Australian Dollar remains depressed below mid-0.7100s vs bullish USD after Chinese data

The Australian Dollar (AUD) remains depressed below 0.7150 against the bullish US Dollar (USD) on Tuesday, having struggled to build on a modest bounce from the 0.7100 region or a three-week low. Market sentiment is negative toward the currency pair for the second consecutive day. China's mixed macroeconomic data had little impact on the AUD/USD pair, which stayed stagnant near 0.7130 throughout the Asian trading session.

China's National Bureau of Statistics reported that August retail sales grew by 0.4% year-over-year, below the 0.8% expectation, and fixed asset investment dropped to -7.2% year-to-date from -6.7% in July. Industrial production in China increased by 5.2% year-over-year in August, surpassing consensus estimates of 4.8%. However, these figures did not provide any significant boost to the AUD, as the US Dollar continued to be an exclusive driver of the AUD/USD pair's momentum.

The US Dollar Index (DXY), which gauges the greenback's strength against a basket of currencies, held steady near a two-week peak touched on Monday and persists as a headwind for the AUD/USD pair ahead of the upcoming two-day Federal Open Market Committee (FOMC) meeting. The anticipation that the US Federal Reserve (Fed) will raise interest rates on Wednesday, combined with oil-inflation risks, strengthens the USD and exerts pressure on the AUD/USD pair.

Meanwhile, positive expectations about a potential interest rate hike by Australia's Reserve Bank of Australia (RBA) later in the month may help mitigate losses for the AUD/USD pair. The AUD/USD pair is currently trading just below the 23.6% Fibonacci retracement level at 0.7147, which serves as the immediate upside resistance. The currency pair exhibits a constructive near-term bias above the 50-day Simple Moving Average (SMA) at 0.7074.

If the AUD/USD pair sustains its strength above the 50.0% retracement level at 0.7049, it could potentially move toward the recent swing high around 0.7234, where significant resistance is expected to emerge.