AUD / USD bounces off strength in retail sales
AUD / USD is up around 0.5% in forex at the time of writing, although it remains below the 0.72 handle. Australians continued to “do their part” in November, with retail trade increasing 7.3% in November, up from 3.9% in October and surpassing the 3.5% forecast. That makes it the biggest post-pandemic monthly increase and, if measured at the same time the year before, retailing grew 5.8%.
If we take a look behind the headlines issue, we note that clothing and department stores accounted for the bulk of the spending madness, with clothing increasing 38% (or 16.5% year-on-year). ) and department store trade up 26% (or 2% y / y). Cafes and restaurants grew 9% in November (11% yoy) and only food retailing contracted, down just -2.5% m / m (or -0.4% yoy ).
At this point, we can only assume that the December numbers will extend the run, which is ultimately a good thing for the growth numbers. That said, the RBA will likely remain as accommodating as ever, but it was enough to consider the Australian dollar (AUD) as Asia’s strongest major currency in forex today, which rose against all of its major peers.
AUD / USD 4 hour chart
AUD / USD is up around 0.5% in forex at the time of writing, although it remains below the 0.72 handle. And while retail sales have given it additional leverage in its approach, we remain skeptical that these gains will extend if the US CPI turns out to be strong tomorrow. A strong impression of inflation is likely to be an approximation of 4 Fed hikes, the first being in March, and that will offset more than the positive flows in today’s retail numbers. Of course, if the US CPI disappoints (which is unlikely) then we will have a bullish argument for AUD / USD in the short term.
Technically, the pair AUD/USD had a decent break out of trend support and is now in a potential 3 wave correction against its bearish movement. We prefer to merge into rallies to or up to the 61.8% Fibonacci ratio / broken trendline and favor a retest of last week’s low, with potential for an extended run to 0.7100.
By Matt Simpson, Forex.com » Official site
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