Australian shares were set to open lower on Tuesday, with the benchmark weighed on by heavyweight miners’ fears of Chinese regulatory scrutiny into iron ore prices. Iron ore futures slumped on Monday as speculative interest in the steelmaking ingredient faded after China’s steel producers pushed for a regulatory probe into skyrocketing prices and a crackdown on any wrongdoing. The local share price index futures YAPcm1 fell 0.3%, a 16.2-point discount to the underlying S&P/ASX 200 index .AXJO close. The benchmark rose 0.3% on Monday.

Australia on Tuesday urged China to clarify the reports, which it said would breach international trade rules if true. Coal is the third biggest export from Australia, which has been embroiled in a worsening diplomatic dispute with its largest trading partner China. Beijing has imposed a series of trade reprisals after Canberra called for an international inquiry into the source of the coronavirus. Australia’s prime minister said a shift by China away from Australian coal imports would be “a bad outcome for the environment”. “It really is a lose-lose here because Australian coal, compared to that coal that is sourced from other countries, the other countries have 50% higher emissions than Australian coal,” Morrison told media on Tuesday.

China’s first-tier economic data released Monday painted a mixed picture of the world’s second-largest economy. As represented by Retail Sales, China’s consumer spending rose 5% year-on-year in November versus 5.2% expected and 4.3% previous. Industrial Production rose versus 7% as expected, following October’s 5.9%.

While the uptick in the factory output is good news for the commodity-sensitive AUD, so far, the currency pair has struggled to gather upside traction. That’s possibly because markets are forward-looking and might be worried about rising prospects of the economically-painful hard coronavirus lockdowns across the advanced world. Besides, the weak Retail Sales number weakens the China economic rebound story.

The Reserve Bank of Australia’s December meeting minutes released early Tuesday showed policymakers stood ready to boost stimulus if required. The dovish tone, however, failed to move the Aussie dollar. RBA’s Kearns was out on the wires, stating that Australia’s banks are better prepared than they were during the 2008 crash.

AUD/USD 4 Hours Chart:

Support: 0.7512 (S1), 0.7491 (S2), 0.7458 (S3).

Resistance: 0.7566 (R1), 0.7599 (R2), 0.7620 (R3).

Amidst all the catalysts creating pressure on the Aussie, we expect a bearish trend for AUD/USD.