AUD/USD: Muted response to below-forecast Aussie Retail Sales

AUD/USD is barely moving in response to the weaker-than-expected Aussie data released at 01:30 GMT. The currency remains sidelined above 0.7135, having rallied by 1.59% on Tuesday. 

The pair’s resilience could be associated with the American dollar’s broad-based weakness and the rally in gold, one of Australia’s key exports. 

Retail sales miss expectations

Consumer spending, as represented by Retail Sales, rose 2.4% month-on-month in June, having risen by 16.9% in May. Markets were expecting a rise of 7.1% in June.

The sharp slowdown in Retail Sales growth is not necessarily bad news. This is because the big spike seen in May was largely a result of “revenge spending” following the easing of coronavirus-induced lockdown restrictions. 

In any case, the focus at the moment is on the broad-based US dollar weakness. The greenback has taken a beating so far this week due to optimism stemming from progress in coronavirus vaccines and the European Union’s landmark fiscal deal. In addition, hopes for additional US fiscal stimulus seem to be weighing on the safe-haven US dollar. 

What’s more, the rally in gold is showing no signs of slowing down and could be helping the AUD consolidate on Tuesday’s massive gain. The yellow metal is currently trading at $1,857, representing over 20% gains on a year-to-date basis, having reached a fresh nine-year high of $1,866 soon before press time.

While the odds appear stacked in favor of the Aussie bulls, further gains may remain elusive if the number of coronavirus cases in Australia and the US continues to rise. 

Technical levels