Australian Retail Sales overview
The Pacific-Asia market session kicks off the new week with Australian Retail Sales due at 01:30 GMT, forecast to clock in at 0.3% versus the previous reading of 0.4%. Economic growth within Australia’s economy has been beleaguered at best, with the Reserve Bank of Australia (RBA) stuck in a rut on interest rate hikes, recently ‘celebrating’ the second anniversary of no major policy adjustments for the central bank as the interest rate divergence between the Aussie and the US Dollar looks set to widen further.
Bearish pressure remains the major tonic of choice for the AUD/USD, with a mix of bearish factors driving the major pair steadily lower: US-China trade wars have increased downside pressure on industrial metals, a key component of the Australian economy, while Aussie-China relations also falter, with China shunning Aussie journalists and Australian banning Chinese phone companies from their domestic mobile network markets. Add to that the recent resignation of Australian Prime Minister Malcolm Turnbull and 10-year Aussie bond yields declining into 2.5%, and the AUD is set for a rough ride looking forward, and traders are bracing for a further slip for August’s Retail Sales, and a surprise to the upside is unlikely to drive much action as markets keep the Aussie firmly at the bottom of the barrel.
How could it affect the AUD/USD?
The embattled Aussie has had a bad roll for 2018, steeply off of the year’s highs above the 0.8100 level, down around a thousand pips and looking set for more if things don’t change soon; according to Matt Weller, CFA, CMT of Faraday Research, “technically speaking, AUD/USD remains locked in a crystal-clear bearish channel. After peaking in the mid-0.7300s earlier this week, the currency has fallen to test its 20-month low near 0.7200 now. A break below this level would point toward a test of the prominent support levels from May and December of 2016 in the mid-0.7100s, and an even steeper drop cannot be ruled out. At this point, only a break back above the bearish trend line near 0.7400 would erase the bearish bias in the pair.”
Key notes
AUD/USD analysis: no relief for Aussie, 0.6826 in the cards
AUD/USD Testing 20-Month Low on “Perfect Storm” of Bearish News
AUDUSD Outlook: Bears look for extension towards key support at 0.7202
About the Australian Retail Sales
The Retail Sales released by the Australian Bureau of Statistics is a survey of goods sold by retailers is based on a sampling of retail stores of different types and sizes and it”s considered as an indicator of the pace of the Australian economy. It shows the performance of the retail sector over the short and mid-term. Positive economic growth anticipates bullish trends for the AUD, while a low reading is seen as negative or bearish.
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