When are the Australian Retail Sales/ Inflation and how could they affect AUD/USD?

Australian Retail Sales/ Inflation overview

Markets eagerly look forward to the key Australian economic releases due to be reported shortly in the lead up to the Reserve Bank of Australia (RBA) interest rate decision due on Tuesday.

Australia's seasonally-adjusted monthly retail sales, due at 0030 GMT, are expected to rise by 0.2% in September versus the previous reading of +0.4%. Meanwhile, the Inflation numbers for October, as reported by TD Securities, are seen dropping in at 0100 GMT. In September, the Inflation gauge arrived at 1.5% YoY and 0.1% MoM.

Analysts at Westpac noted: “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%.”

How could they affect the AUD/USD?

The AUD/USD pair is seen consolidating Friday’s surge just ahead of the 0.69 handle heading into the upcoming event risks. The spot cheered the renewed optimism on the US-China trade front after both sides reported progress on Phase 1 of the trade deal. Further, broad US dollar weakness, in the face of dismal US manufacturing sector activity reports, also added to the upside in the Aussie.

Should the data disappoint, it would once again fan RBA rate cut hopes and drag the Aussie dollar lower across the board. AUD/USD could fall back below the 0.69 handle in a bid to test the recent support around 0.6880 region. A breach of the last would expose the 0.6850 barrier.

On the flip side, the spot could retest the October highs of 0.6930 on a positive surprise, opening doors towards 0.6950/ 54 (psychological figure/ 200-DMA). Buyers will take over completely on a break above the 200-DMA, with the resistance at 0.6970 (daily classic R3) next on sight.

Key Notes

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

RBA rate cut unlikely, AUD driven by renewed global demand for risk

AUD/USD Forecast: Technical readings back a run toward 0.7100

About the 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.

About the Australian TD Securities Inflation

TD Securities Inflation released by The University of Melbourne - Faculty of Economics and Commerce estimates inflation in the Australian economy. The higher inflation, the stronger the effect it will have on a probability of a rate hike by the RBA. Generally speaking, a high reading should be taken as positive, or bullish, for the AUD, while a low reading is seen as negative or bearish.

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