- Increased borrowing costs are finally having an impact on Australia’s consumer spending.
- Australia’s retail sales fell 0.2% to A$96.9 billion ($66.99 billion) in the December quarter.
- US nonfarm payrolls increased by 517,000 jobs in January.
Today’s AUD/USD forecast is slightly bullish. Australian retail sales volumes decreased last quarter for the first time in a year as consumers cut back on their purchases of goods, a sign that increased borrowing costs are finally impacting consumer spending.
The Australian Bureau of Statistics reported that real retail sales fell 0.2% to A$96.9 billion ($66.99 billion) in the December quarter. Even so, it was better than market expectations of a 0.6% decline and will only slightly slow economic growth.
In the quarter, retail price growth was the slowest it has been all year, according to the report, which should assure the Reserve Bank of Australia (RBA) that its aggressive policy tightening is beginning to dampen demand slowly. The RBA will likely hike rates by a quarter point to 3.35% at the meeting on Tuesday.
The dollar continued to rise on Monday, capping AUD/USD gains as solid US jobs data raised the possibility that the Federal Reserve would maintain its hawkish stance for longer.
The closely watched employment report released Friday by the US Labor Department revealed that nonfarm payrolls increased by 517,000 jobs in the previous month.
According to traders, the Fed’s policy rate is expected to peak at 5.05% in June before the central bank lowers rates in the year’s second half.
AUD/USD key events today
There won’t be any significant news releases from the US or Australia today, so investors will likely keep digesting Friday’s jobs report.
AUD/USD technical forecast: Bulls return for a pullback
The 4-hour chart shows AUD/USD trading far below the 30-SMA and the RSI well below the 50-level. The price has fallen steeply after breaking below the 30-SMA, finally finding support at the 0.6900 key level. At this point, bulls returned for a retracement of the recent move.
However, they are coming up against a strong resistance level at 0.6950. If bulls cannot go above this level, the bearish move might continue below the 0.6900 support. However, if bulls can break above, the price will likely retest the 0.7001 resistance before resuming the downtrend.
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