The AUD/USD pair trades slightly lower near 0.6645 during Monday’s Asian session, easing about 0.10% on the day. The modest pullback comes as disappointing economic data from China weighs on the Australian Dollar, reminding markets of Australia’s strong trade exposure to its largest export destination.

China’s National Bureau of Statistics reported that Retail Sales rose just 1.3% year-on-year in November, well below expectations for a near 3% increase. Industrial Production also missed forecasts, slowing to 4.8% from 4.9% in October, while economists had looked for growth closer to 5%. The softer figures point to fragile domestic demand and uneven industrial momentum in China, which tends to translate quickly into pressure on the Aussie due to Australia’s reliance on commodity and goods exports to Beijing.

Adding to the near-term drag, the Australian Dollar has already been on the defensive following last week’s weak domestic labour market report. Data released on Thursday showed that Australia lost 21.3K jobs in November, sharply contrasting with forecasts for a 20K increase. The unexpected decline has raised concerns about labour market resilience and may temper expectations that the Reserve Bank of Australia will maintain a firmly restrictive stance for an extended period.

Despite these headwinds, the broader outlook for AUD/USD remains relatively constructive. The US Dollar continues to struggle to regain sustained momentum as investors reassess the Federal Reserve’s longer-term policy trajectory. While the Fed’s latest dot plot signalled only one rate cut in 2026, with the policy rate seen near 3.4% by year-end, markets remain sceptical and continue to price in a greater chance of additional easing if US growth and employment cool further.

This divergence between cautious optimism on the Aussie side and a softer structural outlook for the US Dollar has so far helped limit deeper losses in the pair. Risk sentiment and external data remain key drivers in the near term.

Looking ahead, attention now turns to the US Nonfarm Payrolls report for November, due on Tuesday. The data will be closely watched for confirmation of labour market slowing, which could further shape expectations around the Fed’s easing path and influence the next directional move in AUD/USD.

Trade Idea:
Consider buying AUD/USD on dips toward 0.6600, targeting 0.6720, with a stop below 0.6550, as longer-term Fed easing expectations may limit US Dollar upside.