Australian Dollar Steady On Retail Beat, RBA, GDP in Firm Focus

AUSTRALIAN RETAIL SALES, TALKING POINTS:

  • Australian retail sales inched up past forecasts in April
  • Corporate profits rose too
  • However the Australian Dollar clearly has more pressing concerns

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The Australian Dollar showed muted reaction Monday to some quite upbeat economic data from its home country. The looming presence of Tuesday’s monetary policy meeting from the Reserve Bank of Australia may have blunted the numbers’ impact.

Retail sales rose 0.4% on the month in April, beating the 0.3% gain expected and exceeding market forecasts for the first time in many months. The retail sector remains subdued overall, however, and it seems unlikely that consumers are going to come back strongly anytime soon.

Corporate profits were revealed to have risen a punch 5.9% in the last year’s final quarter, according to official data. Overall profits seemed to be back on the rise having been stagnant in the previous two quarters, albeit at fairly high levels.

To round out a reasonably strong morning’s numbers, Australia and New Zealand Bank reported that job advertisements rose to 179,245 in May, from April’s 176,418.

AUD/USD had been creeping higher through the morning. The US Dollar had been broadly buoyed by last Friday’s strong US employment data but increasing worries about trade protectionism from the Tump White House has weighed on it in Asia as a new trading week got under way.

The Reserve Bank of Australia will give its next interest rate decision on Tuesday, and markets expect no change to the record low 1.50% Official Cash Rate which has been with us since August, 2016. Indeed no rise is priced in to rate-futures markets now until the second half of 2019. The Australian economy is by no means doing terribly, but inflation and wage pressures remain stickily low, and the contrast between the RBA and a Federal Reserve still apparently keen to raise rates, is stark.

However we will also get a look at Australian Gross Domestic Product data for the first quarter this week, on Wednesday. That is expected to beat the disappointing showing of 2017’s last three months.

On its broader, daily chart, AUD/USD remains in the broad range which has contained trade since late April. It also appears to have arrested the long fall in place since the Aussie peaked for the year so far, back in January.

Assuming that the RBA’s statement isn’t overly dovish, strong growth data could see that range top challenged.

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— Written by David Cottle, DailyFX Research

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