When is the Australian Retail Sales and how could they affect AUD/USD?
|Retail Sales overview
Early Wednesday, the market sees the preliminary reading for the August month Retail Sales data from Australia at 01:30 GMT. Following a 3.2% increase in July, markets are expecting a mild weakness in the print as the period comprises of the coronavirus (COVID-19) resurgence in Victoria. Although the recent recoveries in the virus conditions in Australia restrict the negative impacts of the data, any extreme disappointment can exert additional downside pressure onto the AUD/USD prices.
Analysts at Westpac don’t turn down the market forecasts while saying:
Westpac looks for a -0.5% m/m dip after July’s strong 3.2% m/m, 12.0% y/y which came despite weakness in Victoria. This series accounts for less than half of total consumer spending and overweights e.g. supermarkets and hardware stores while underweighting entertainment and other services, so its strength is somewhat misleading.
Elsewhere, the TD Securities said:
Let's see whether the Preliminary Aug Retail Sales posts an impressive follow up to the +3.2% m/m in July, +12.0% y/y. Discretionary retail sales posted a strong advance, +4.6% m/m, +17 y/y and the gains over July were broad-based. The only category now not materially above pre-virus levels is cafes & restaurants. All regions posted gains with NSW +5.9% m/m outperforming, only Victoria saw sales drop, -2.1% m/m.
How could it affect AUD/USD?
AUD/USD picks up bids towards 0.7200, currently around 0.7175, before Wednesday’s Tokyo open. The aussie pair dropped heavily in the last few days amid the broad US dollar strength and diminishing market sentiment. In doing so, AUD/USD slumped to a one-month low the previous day. While the pair’s recent pullback could be attributed to the Commonwealth Bank’s (CBA) PMI upbeat data for September, traders are awaiting welcome Retail Sales figures to keep the recovery moves. Though, virus woes and the US dollar strength can keep the bulls chained unless the risk catalysts shift. Hence, today’s Aussie Retail Sales can help the AUDUSD prices to keep the latest U-turn if crossing 3.2% prior increase while any contraction in the data might not refrain from recalling the bears.
Technically, the pair’s sustained trading below 50-day EMA, at 0.7175 now, will make it vulnerable to revisit the August 20 low near 0.7130 ahead of challenging the 0.7100 threshold. Meanwhile, an ascending trend line from August 03, currently around 0.7230, follows 0.7200 round-figures to restrict short-term AUD/USD upside.
Key Notes
AUD/USD: Depressed near monthly low under 0.7200, eyes Aussie Retail Sales
AUD/USD Forecast: Busy day in Australia
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.
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