AUD/USD: Recovery elusive despite upbeat Aussie Retail Sales
- AUD/USD trades near 0.7725 versus 0.7760 early Monday.
- Australia's Retail Sales growth picked up the pace in November.
- The US dollar draws bids on the back of rising US Treasury yields.
AUD/USD struggles to recover the ground lost early Monday despite the upbeat Aussie data released soon before press time.
As represented by Retail Sales, consumer spending in Australia rose 7.1% month-on-month in November following October's 1.4% rise. The Melbourne Institute's inflation data showed the cost of living in Australia increased by 0.5% month-on-month in December following November's 0.3% rise.
The AUD/USD pair still trades at session lows below 0.7725, representing a 0.61% drop on the day. The US dollar looks to be benefitting from the recovery rally in the Treasury yields. The 10-year yield jumped over 20 basis points to 1.12% last week and is currently seen at 1.11%.
"As yields rise, they may be triggering foreign hedges or other flows that put a bid in the dollar," Adam Button, Currency Analyst at AhsrafLaidi.com, noted, adding that a continued rise in yields would eventually work against equities and provide a significant tailwind for the dollar.
The Aussie, however, may find relief later today if China's Producer Price Index for December prints above zero, marking an end of a multiple month-long deflationary trend in factory-gate prices.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
