China's economy slips, Australian Dollar edges higher

The Australian dollar is coming off its best week since April, posting gains of 1.4%. In the European session, AUD/USD is trading at 0.6657, up 0.12% on the day.

China's industrial production, retail sales slip in August

China posted disappointing data in September, as the second largest economy in the world continues to cool. Industrial production expanded 5.2% y/y, down from 5.8% in August and below the market estimate of 5.7%. This was the lowest pace of growth since August 2024, as manufacturing activity slowed and domestic remained weak.

China's retail sales rose 3.4% y/y in September, below 3.7% in August and the market estimate of 3.8%. This was the slowest pace since November 2024 and the third straight month of acceleration. There was more bad news on the labor front, as the unemployment rate ticked up to 5.3% from 5.2%, the highest level since February.

The US-China trade war is weighing on China's economy and the government is pushing exporters to find news markets. If that boosts economic activity, it will be good news for Australia, as China is its largest trading partner.

Investors are keeping an eye on the Federal Reserve, which is virtually certain to lower rates on Wednesday. The Fed hasn't cut rates since December 2024, which means that a cut will be a significant move, even if it has been priced in by the markets. With the US labor market showing signs of strain, the Fed could cut again before the end of the year, likely in December. Inflation remains above the 2% target but the Fed considers the weakening job market a bigger threat to the economy than inflation.

AUD/USD technical

• AUDUSD is testing resistance at 0.6650. Above, there is resistance at 0.6668.

• 0.6630 and 0.6612 are the next support levels.

AUDUSD 1-Day Chart, September 15, 2025