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Early Thursday morning in Asia at 00:30 GMT markets will see Australia’s December month Retail Sales and Trade Balance numbers together with National Australia Bank’s (NAB) Business Confidence for the fourth quarter (Q4). While these numbers were previously considered second-tier, mixed clues from the Reserve Bank of Australia (RBA) as well as a lack of uniformity in data make every figure important for the AUD/USD pair traders.

Market expectations favor an upbeat reading of Trade Balance, to 5,950M from 5,800M prior, versus likely contraction in seasonally adjusted Retail Sales to -0.2% against 0.9% earlier. Further, the NAB’s business sentiment gauge is expected to rise +3 compared to -2 previous readout.

Details suggest that Imports and Exports reported -3% and 2% respective figures during the previous month.

Analysts at TD Securities offered details of market expectations in their report saying,

The Trade surplus for Nov at A$5.8b was larger than expected due to a bump in commodity exports while imports fell 2.8% on the month. The decline in consumption goods imports underscores the softness in domestic demand. For the Dec Trade Balance we pencil in a A$6.9b surplus, driven by a 5% rise in exports and 2% rise in imports.

Black Friday promotions saw a +0.9%/m surge in retail sales in Nov and may have brought forward Christmas purchases. The impact of bushfires, retailer feedback and a sharp drop in the retail sector’s PMI in Dec suggests a softer outcome as more likely. We pencil in a 0.2% drop in Dec retail sales. A flat outcome would be considered a positive. As for real retail sales, the annual outcome for Q3 dropped to -0.2%/y, the weakest annual growth rate since 1991. For Q4 real retail sales, we pencil in a 0.2%/q rise.

NAB Business Confidence for Q3 fell to the lowest levels since Q1 2013 and based on the monthly data Business Confidence in Dec fell to the lowest levels since July 2013. This is well below average. The Business Confidence number for Q4 is unlikely to reflect the bushfire impact, but the monthly confidence numbers suggest another weak print for Q4 Business Confidence.

How could they affect AUD/USD?

While the recent slew of economics from Australia and China (it’s the main customer) haven’t been disappointing, the actual impact of coronavirus over the economies are yet to be witnessed. Also, the broad soft picture of inflation hasn’t so far while the RBA continues to show its readiness to cut the rates if needed. Hence, downbeat readings from the scheduled data could have a short-term negative impact on the AUD/USD pair, considering the current risk-on. However, an extreme disappointment will not hesitate to change the course of the pair’s latest recovery.

Technically, A descending trend line since January 01, 2020, at 0.6800, followed by 100-day SMA around 0.6835, guard the near-term upside of the pair while sellers will enter below the monthly low surrounding 0.6680.


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About 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.

About Australian Trade Balance

The trade balance released by the Australian Bureau of Statistics is the difference in the value of its imports and exports of Australian goods. Export data can give an important reflection of Australian growth, while imports provide an indication of domestic demand. Trade Balance gives an early indication of the net export performance. If a steady demand in exchange for Australian exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the AUD.

About National Australia Bank’s Business Confidence

The National Australia Bank Business Confidence is a survey of the current business condition in Australia. It indicates the performance of the overall Australian economy in a short-term view. A positive economic growth anticipates bullish movements for the AUD, whereas a negative growth is seen as bearish.