The Australian dollar finally received some good news today. The currency is higher following better-than-expected monthly retail sales. Looking at the charts, AUD/USD rallied from around 0.760 to 0.7640 following retail sales numbers. The Aussie also enjoyed a small bounce following the RBA's statement. While the RBA did not make any adjustments to its cash rate (1.5%) it omitted references to "inflation is likely to remain low for some time". Looking at yesterday's TD Securities monthly inflation figures, headline inflation accelerated from 2.6% to 2.7%. Our short-term and medium-term outlook remain bearish.
AUD/USD is currently up and trading just above 0.7640. Looking at EUR/AUD, the pair is down and currently just above 1.550. The GBP/AUD is down and the exchange rate is currently above 1.7510.
This is a significant week for economic data relating to the Australian dollar. TD Securities inflation was higher than the previous print (2.7% vs. 2.6% prior). The RBA left cash rates on hold but omitted references to "inflation is likely to remain low for some time". Retail sales beat expectations (0.5% vs. 0.3% expected). On Wednesday we’ll get GDP growth figures. On Thursday we’ll see AiG Performance of Construction Index and trade figures. Lastly on Friday we’ll get home loans and investment lending for homes.
As the Australian dollar continues to sell off following China's 19th Party Congress, we are downgrading the currency to bearish. Looking at a daily chart of the Aussie, the currency is trading within normal conditions. This is based on various technical indicators.
As the currency weakens on lower rate hike expectations and slow growth, we are now bearish on the Australian dollar in the medium-term. Looking at a weekly chart, the Aussie is trading within normal conditions. Our analysis is based on various technical indicators.