AUD/USD consolidate gains to 0.6915 ahead of Aussie Inflation/Retail Sales data

Amid a lack of fresh catalysts before second-tier data, the AUD/USD pair takes the rounds to 0.6915 during early Monday morning in Asia.

Asian markets are still to pick-up amid an absence of major catalysts. However, the underlying tone stays positive as headlines concerning the US trade relations with China, Europe, Japan and Korea are mostly upbeat. The United States (US) President Donald Trump recently mentioned that the US-China phase one deal could be signed in Iowa this month, Fox Business Network said. On the other hand, the US Commerce Secretary Wilbur Ross, in his interview with Bloomberg, said that the US may not need to impose tariffs on imported vehicles later this month after holding “good conversations” with automakers in the European Union, Japan and Korea.

The pair recently gained traction as odds of the US-China trade deal increased amid declining chances of the rate cut from the Reserve Bank of Australia (RBA) in its Tuesday’s monetary policy meeting. The reasons could be the latest upbeat private activity number from China and also because of the welcome inflation number at home. Further to note, weakness in the US Dollar (USD), mainly attributed to the Federal Reserve’s easing bias, adds to the Aussie pair’s strength.

Investors will now focus on September month seasonally adjusts (s.a.) Retail Sales, followed by TD Securities Inflation numbers for October, for fresh impulse. For the Retail Sales, Westpac says, “Australia Sep nominal and Q3 real retail sales data is due at 11:30 am Syd/8:30am Sing/HK. This report will be watched with interest by the RBA Board tomorrow. At October’s meeting, they “noted that there had not yet been evidence of a pick-up in household spending following the recent reductions in the cash rate and receipt of the tax offset payments.” Perhaps September will be stronger but in our view, only just: we look for 0.5%mth after August’s 0.4%mth, 2.6%yr. These are the nominal readings; we will also see the inflation-adjusted Q3 estimates, with consensus 0.3%qtr, Westpac on 0.4%.” Further, the TD Securities inflation measure flashed 1.5% YoY and 0.1% MoM in September.

On the other hand, the US Factory orders for September, -0.3% forecast versus -0.1% prior, could join trade headline to offer key catalysts.

Technical Analysis

Unless providing a daily closing beyond 200-day Simple Moving Average (SMA) level of 0.6955, traders shouldn’t be hopeful for 0.7000, which in turn increases the risk of a pullback to 21-day SMA level of 0.6830 if prices slip below September month high of 0.6895.