China PMI likely to reinforce downward pressure on AUD

Australia building approvals have run ahead of private-sector measures of housing activity over recent months, and a 3% correction is expected in July. Although leading indicators are pointing to a broad peak in housing activity, still residential investment is expected to add to GDP into next year. This is because there is a record amount of residential work yet to be done, which is skewed to high-rise apartments. 

As for retail sales, a 0.5% increase is expected in July after sales broadly stagnated in June. Retailer feedback to the Reserve Bank points to modest growth, although surveyed retail sales have been the strongest in years. 

"China PMI will likely have a stronger bearing on the AUD, and we expect a further slide in the index to reinforce recent downward pressure on the currency", notes Barclays.