AUD/USD pares early gains, turns flat above 0.67 as focus shifts to US data

• US Dollar Index stays afloat above 99 mark.
• Reuters sees China's GDP slumping to 4.5% in Q1.
• Industrial Production in US is expected to continue to contract.

The AUD/USD pair closed the first three days of the week in the positive territory but turned south on Thursday amid resurfacing worries over the coronavirus outbreak having a significant negative impact on the Chinese economy. Although the pair staged a technical rebound and rose to 0.6730 area during the Asian session, it erased its gains and was last seen trading at 0.6718, virtually unchanged on a daily basis.

According to a Reuters poll of 40 economists, the Chinese economy is expected to expand by 4.5% on a yearly basis in the first quarter of 2020 following the 6% growth recorded in the last quarter of 2019. "If Chinese authorities failed to contain the virus from spreading rapidly, growth is expected to slow to 3.5% in the first quarter in a worst-case scenario," Reuters further noted.

USD preserves strength ahead of data

In the second half of the day, investors will be paying close attention to the macroeconomic data releases from the US. Industrial Production is expected to continue to contract in January, albeit at a softer pace, and Retail Sales is seen rising by 0.3% to match December's reading.

Additionally, the University of Michigan (UoM) will release its flash estimate of the February Consumer Confidence Index. Ahead of the data, the US Dollar Index is at 99.12, up 0.4% since Monday.

Technical levels to watch for