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The trifecta of the closely watched Chinese economic metrics surprised on the downside over the weekend. This negative data should dictate this week’s risk environment, for the early part at least. However, in early trade markets have been mixed.

China Data

Retail Sales figures, typically a rosy spot for China’s economy, underwhelmed by printing +10.1% YoY in April vs. 10.6% forecasted and 10.5 % the prior month. The number was overburdened by a significant pull back in car sales which only increased by 5.1% versus a 12.3% jump in March. Reading between the lines, as with other stimulus measures in China, the impact of the tax cut that emerged back in December 2015 for the rural Chinese who wished to purchase small family cars is beginning to fade. Moreover, while the tax incentive gave temporarily support to the automotive industry, it is offering no panacea for the flagging mainland economy.

Moreover, the drop in industrial production will undoubtedly spark fears about the strength of a rebounding Mainland economy. Clearly, the positive economic momentum in March has apparently turned soft in April, which will likely send negative reverberations across all asset classes.

Sadly, the pain did not stop there, as fixed asset investment (FAI) continued to deteriorate, coming in at 10.5% versus 11.0% forecasted and 10.7% the previous month. This weaker-than-expected print will sound alarm bells that private companies are holding back on investment due to economic uncertainty. Even more troubling is the fact that FAI has been sliding all year. Critics will also point to market entrance barriers, weighing on this year’s figures.

The Aussie dollar

As expected the Aussie opened a touch lower from the NY close after the miss on the trifecta of Chinese economic data but has since recovered.  However, given the proximity of key domestic economic releases this week, including the RBA minutes and the unemployment report, it will likely be a tough grind lower even if the risk-off environment accelerates. However, the downturn in China’s economic data will certainly weigh on the Aussie going forward.

Traders would be eyeing tomorrow’s RBA policy minutes for a glimpse behind the RBA’s about-turn on interest rates, looking for hints if this was a one-time move or the start of a more aggressive interest rate easing cycle. There will be plenty of interest in the Fed minutes released on Thursday, which might explain the confusion on how Fed members are viewing the economy. However, it is unlikely to alter the market view that the Fed will remain dovish through 2016.

Later this week, the key April employment report is due out with the market calling for a net increase of 12,000 jobs and the unemployment rate ticking higher to 5.8%. Keep in mind the jobs number is notoriously volatile and traders, along with the RBA, usually view the level of unemployment as a more accurate gauge the health of the jobs markets.