AUD/USD remains confined in a range, around mid-0.7400s post-Chinese macro data

• AUD/USD witnessed a subdued/range-bound price action on the first day of the week.
• A cautious mood in the equity markets acted as a headwind for the perceived riskier aussie.
• Mostly disappointing Chinese macro data did little to impress bulls or provide any impetus.

The AUD/USD pair extended its sideways consolidative price action and remained confined in a narrow trading band, around the 0.7400 mark post-Chinese data dump.

The pair struggled to capitalize on its early uptick back closer to over one-month tops touched on Friday and witnessed a modest pullback from the 0.7435 region on the first day of a new week. The prevalent cautious mood around the equity markets was seen as a key factor that acted as a headwind for the perceived riskier aussie amid a subdued US dollar price action.

This, along with weaker than expected Chinese macro releases, collaborated to cap the upside for the China-proxy Australian dollar. The National Bureau of Statistics of China reported this Monday that the economic growth in the world's second-largest economy decelerated to 0.2% and 4.9% YoY rate during the third quarter, as against the previous quarter's 1.3% and 7.9%, respectively.

Adding to this, China's Industrial Production also fell short of market expectations and increased by a 3.1% YoY rate in September, down from 5.3%. This, to a larger extent, offset a better than expected monthly Retail Sales figures, which recorded a growth of 4.4% in September. This comes amid fears of a faster than expected rise in inflation and added to worries about stagflation.

That said, the market reaction, so far, has been limited and warrants some caution for aggressive traders. The recent widespread rally in commodity prices turned out to be a key factor that continued lending some support to the resources-linked aussie. Hence, it will be prudent to wait for a strong follow-through selling before confirming that the AUD/USD pair has topped out in the near term.

Technical levels to watch