AUD/USD Price Analysis: Aus Retail Sales Hit by Increased Cost

• Australian retail sales volumes fell for a second quarter.

• China’s imports contracted sharply in April from a year earlier.

• The market is awaiting the US inflation report on Wednesday.

Today’s AUD/USD price analysis is bearish. The Australian Bureau of Statistics released sales data on Tuesday. Rising rates and the high cost of living are curbing consumer spending in Australia. 

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As a result, retail sales volumes fell for a second quarter in the first quarter of 2023. Real retail sales dropped 0.6% to A$96.17 billion ($65.23 billion), in line with market forecasts. This drop will weigh on economic growth. 

The report also indicated that growth in retail prices was the slowest since the third quarter of 2021. This might reassure the Reserve Bank of Australia that its aggressive policy tightening is slowly cooling demand.

On Tuesday, China’s imports contracted sharply in April from a year earlier while exports grew more slowly than in March. However, the data had a limited impact on currencies. 

The market is now closely watching the US inflation data scheduled for Wednesday, which will likely set the tone for markets after stronger-than-expected jobs data last week. According to analysts, any Fed policy tweaks must be weighed against two things as prices rise. These are the recent turmoil in the US banking sector and a political impasse over resolving the country’s debt ceiling and avoiding a default.

On Monday, the Fed released its quarterly survey of bank loan officers. The survey showed that recent tightening credit conditions in the US were most likely due to rate hikes.

AUD/USD key events today

Investors are not expecting any important economic releases from the US or Australia today. The price will likely consolidate ahead of the US inflation report.

AUD/USD technical price analysis: Bullish momentum stalled

AUD/USD is pulling back from recent highs in the 4-hour chart. The price is approaching the 0.6751 support level after respecting the 0.6800 resistance. It is, however, still above the 30-SMA, a sign that bulls are still in charge. The RSI has also stayed above 50 since the price crossed above the SMA, supporting bullish momentum.

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The pullback might not go lower if the 0.6751 support holds firm. However, if the price break below, we might see it retest the SMA before resuming the uptrend.

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