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 likely in July. 

"Although leading indicators are pointing to a broad peak in housing activity, residential investment is still 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", says Barclays. 

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 a further slide is expected in the index to reinforce recent downward pressure on the currency", added Barclays.