Australian Dollar slides after weak Retail Sales report
|The Australian dollar is down sharply and has fallen to a three-week low. In the European session, AUD/USD is trading at 0.6491, down 0.66%.
Australia’s Retail Sales rise 0.3%
Australia’s retail sales slipped in February to 0.3% m/m, a sharp drop from the 1.1% gain in January and shy of the market forecast of 0.4%. Retail sales were up 1.6% y/y, which is considered weak reading given Australia’s rapid population growth.
Retail sales would slipped to just a 0.1% gain but seven Taylor Swift shows in Melbourne and Sidney boosted spending on clothing, merchandise and dining out, according to the Australian Bureau of Statistics.
Consumer spending remains weak due to elevated interest rates and high inflation. The Reserve Bank of Australia left rates unchanged for a fourth straight time at the March meeting and consumers are feeling pessimistic about the economy, which has dampened consumer spending.
The markets are looking at a rate cut in August or September but the RBA is yet to rule out rate hikes, although the language of the RBA statement at the March meeting was a bit more dovish than at the previous meeting. This week’s inflation release didn’t provide much support for lowering rates, with February CPI remaining unchanged at 3.4% for a third straight month.
The RBA is wary about lowering rates before it is convinced that inflation will remain sustainable in the 2% to 3% target range and won’t rebound if rates are cut. The next meeting is on May 7th and the first-quarter inflation report, which will be released in late April, could have a major impact on the central bank’s rate decision.
AUD/USD technical
-
AUD/USD is putting pressure on resistance at 0.6551. Above, there is resistance at 0.6598.
-
There is support at 0.6467 and 0.6420.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.