Australian ignores weakness in retail sales
Australian dollar prolongs its rally
The Australian dollar continues to impress and is in positive territory for a third day in a row. AUD / USD entered 74 territory earlier today before pulling back slightly.
Australian dollar ignores drop in retail sales
The news was not good for Australian retail sales, but the Aussie continued to recover nonetheless. Retail sales for the second quarter were -1.8% for a second consecutive quarter. Investors did not wince, however, as the reading matched expectations. The publication looks better on an annualized basis, with a gain of 2.9% compared to Q2 of 2020, when consumer spending was depressed at the height of the Covid pandemic.
The US dollar isn’t getting much love at the moment, and sentiment towards the Aussie remains high after the RBA surprised markets and announced it was on track to reduce bond purchases in September. The RBA was increasingly expected to drop its July pledge to cut bond purchases, but the Bank has decided to move forward, despite the recent rise in Covid in Australia which has resulted in numerous blockages.
RBA Governor Philip Lowe was positive about the economic outlook and highlighted the resilience of the economy, which he hopes to rebound despite the pandemic. Yet even with the surprise tapering announcement, the RBA’s monetary policy remains accommodative. The reduction program will be reviewed in November, and Lowe reiterated that the bank does not plan to hike rates until 2024.
Markets will continue to monitor the central bank closely for the remainder of the week. RBA Governor Philip Lowe testified before lawmakers on Thursday and the RBA releases its quarterly economic forecast on Friday.
AUD / USD Technical
- AUD tests resistance at 0.7402. This is followed by resistance at 0.7456
- AUD / USD has support at 0.7305. Below there is support at 0.7262
For an overview of all of today’s economic events, check out our economic calendar. www.marketpulse.com/event-economique
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