AUD/USD Leads Gains as Dollar Slips; China Retail Sales Miss in July

The dollar came under pressure at the start of the new week, with AUD/USD leading gains across the majors while the greenback lagged in European trading. Sentiment was steady overall, with European indices mostly a little higher and S&P 500 futures holding near flat, allowing risk-sensitive currencies to outperform. Chinese data disappointed: July retail sales missed expectations, industrial output growth slowed and new home prices extended their declines, with the statistics bureau attributing part of the softness to extreme weather conditions. The Australian dollar's resilience despite the soft China figures underscores that dollar weakness, rather than commodity demand optimism, was the dominant driver. Geopolitically, Iran reaffirmed that talks with the United States have not yet begun, keeping a modest risk premium in energy markets. With no major US releases on Monday, positioning dominated flows, though the week features a significant test of US consumer health. Traders should watch whether AUD/USD can sustain gains without confirmation from Chinese activity data, while EUR/USD upside remains dependent on continued softening in US yields.