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AUD/USD Outlook: Australia’s Retail Sales Rebound in January

  • Australian retail sales recovered in January.
  • Analysts expect the Australian economy to grow by a respectable 0.7% in the December quarter.
  • Core durable goods orders in the US rose in January.

Today’s AUD/USD outlook is slightly bullish. After a sudden decline in December, mainly attributed to shifting consumer behavior, Australian retail sales recovered in January. However, the underlying pulse struggled with high inflation and rising interest rates.

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Retail sales increased 1.9% in January compared to December, when they fell 4.0%, according to the Australian Bureau of Statistics data on Tuesday. Revenue increased 7.5% to $35.1 billion ($23.67 billion) from the previous year.

Analysts expect the economy to grow by a respectable 0.7% in the December quarter and 2.7% overall, primarily due to the overall strength of consumer demand.

The Reserve Bank of Australia has already increased rates by 325 basis points to a decade-high of 3.35%, and markets are betting on additional increases toward 4.35%.

The central bank anticipates the economy will expand at a disappointing 1.4% this year and 1.6% next year, a slowdown that should help bring supply and demand back into balance and lower inflation.

In January, new orders for key capital goods produced in the United States rose to their highest level in five months while shipments of these so-called core goods recovered, indicating that business spending on equipment began to grow at the beginning of the first quarter.

It is possible that higher pricing last month contributed to some of the larger-than-anticipated increase in core capital goods orders that the Commerce Department announced on Monday. This increase concluded two consecutive monthly drops. It helped to present an optimistic picture of the economy.

AUD/USD key events today

The US will release a report on consumer confidence in economic activity, which is a leading indicator that can predict consumer spending.

AUD/USD technical outlook: A short rebound in the downtrend

AUD/USD technical outlook

The 4-hour chart shows AUD/USD in a downtrend, with the price trading below the 30-SMA and the RSI below 50. The price is currently pulling back from the 0.6700 key level, but bulls are weak. Bears will soon come back and resume the downtrend.

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If the pullback continues higher, it might stop at the 30-SMA resistance, where the price will bounce lower. The bears will be looking to make a new low below the 0.6700 key level.

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Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.