AUD Daily Updates

11 January 2018

Following sharply higher retail sales figures, the Australian dollar is strengthening today. In recent history, weakness in consumer spending has weighed on the currency. The issue was even pointed out by the Reserve Bank of Australia in a recent report. Following today's figures, there is some optimism that the Australian consumer is not as weak as many had assumed. Looking at AUD/USD, the pair is heading towards 0.79. The Australian dollar has been remarkably strong since mid-December, when AUD/USD bottomed near 0.74. Yesterday, the currency was also higher following US dollar weakness. As we wrote in our US dollar daily update earlier today, USD was weak following an announcement that China was set to curtail its purchases of US treasury bonds. Our short-term outlook on the currency is bullish, while our medium-term outlook remains neutral.   

AUD/USD is currently up and trading just above 0.7860. EUR/AUD is currently down and trading above 1.5170. GBP/AUD is down and trading above 1.7130. 

This is a very light week for economic data relating to the Australian dollar. The AiG performance of construction index was lower than the previous print (52.8 vs. 57.5 prior). Retail sales beat estimates by a significant margin (1.2% vs. 0.4% expected). Last week, the trade balance missed estimates by a wide margin and Australia registered a net trade deficit for October and November. 

Updated 
Short term outlook
Bullish

As the Australian dollar strengthens thanks to strong commodity prices and global growth, we are upgrading the currency to bullish. Looking at a daily chart of the Aussie, the currency is now trading within a normal range. This is based on various technical indicators.  

Medium term outlook
Neutral

As the Australian dollar rebounds thanks to strong global growth, we are now neutral 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.  

Updated