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Australian Retail Sales is considered one of the most important indicator of consumer spending. The indicator’s release in the first week of each month provides analysts and traders with  an early  look at consumer spending. A reading that is higher than the market forecast is bearish for the US dollar.

Here are all the details, and 5 possible outcomes for AUD/USD.

Published on Wednesday at 00:30 GMT.

 Indicator Background

Consumer spending is one of the most important components of the economy, and strong numbers in this sector signify growth and a stronger economy.

The February reading of -0.1% was a disappointment, falling short of the market expectations of a 0.2% rise. Also, it was the first time the indicator dipped into negative territory since August 2011. The forecast for  March calls for a  respectable 0.3% rise.

Sentiments and levels

Weak  commodity prices and the European debt crisis continue to be a major concern for Australia’s vital export sector, and are weighing on the Australian dollar. With the global slowdown and less demand from the Chinese market,  a recession in 2012 remains a possibility. So, the overall sentiment is bearish on AUD/USD towards this release.

Technical levels, from top to bottom: 1.10, 1.0884, 1.08, 1.0750, 1.0650 ,1.0585 and 1.05.

5 Scenarios

  1. Within expectations: 0% to 0.7%: In such a case, the Aussie is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 0.8% to 1.1%: An unexpected higher reading can send AUD/USD well above one resistance line.
  3. Well above expectations: Above 1.1%: Such an outcome would propel the pair upwards, and a second resistance line might be broken as a result.
  4. Below expectations: -0.4% to -0.1%: A negative reading could push AUD/USD below one level of support.
  5. Well below expectations: Below -0.4%: In this scenario, the Aussie will fall and could break a second support level.

For more about the Aussie, see the AUD to USD forecast.

Expert score

5

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