AUD/USD – Aussie at 10-Week Highs, US Retail Sales Improve

The Australian dollar has posted gains on Friday and is trading at 0.7650 in the North American session. In economic news, US consumer inflation numbers matched the forecast, while retail sales reports beat the estimates. There are no Australian releases on the schedule.

There were no surprises from US inflation numbers on Friday. CPI and Core CPI both posted small gains of 0.2% in June, matching their estimates. These figures showed no change from the previous month, as consumer inflation remains stuck at low levels. Positive manufacturing inflation data on Thursday (Core PPI and PPI both beat their estimates) had raised hopes for stronger CPI numbers as well, but this did not occur. Weak inflation numbers will dampen any chances of a Federal Reserve rate hike in the near future, and many analysts are skeptical that the Fed will raise rates before next year. There was much better news on the consumer spending front, as Retail Sales climbed 0.7% and Core Retail Sales gained 0.6%, as both key indicators beat their estimates. This points to stronger consumer spending, a key factor in economic growth.

The Australian employment market continues to improve. Employment Change gained 7.9 thousand, but this fell short of the forecast of 10.1 thousand. The unemployment rate edged up to 5.8%, matching the estimate. There was positive news on the consumer spending front, as New Motor Vehicle Sales recorded a strong gain of 3.1%, reversing directions after two straight declines. Still, the Australian consumer continues to remain skeptical about the economy, according to the most recent consumer confidence report. Westpac Consumer Confidence slipped 3.0% and fell to 99.1 points (a reading below the 100-level indicates pessimism). To be fair, the survey took place just after the Australian election campaign, so the political uncertainty after the vote may well have had a negative impact on the confidence level of consumers. The consumer report failed to follow the lead of NAB Business Confidence survey on Monday, which surged to a reading of plus-6. The strong NAB figure surprised many experts, as the global economy is weak and the Brexit shocker has a chilling effect on the financial markets. Strong business confidence could point to improved economic growth in the second quarter, which would be bullish for the Australian dollar. The currency has looked sharp in the month of July, gaining about 200 points. The pair is currently at its highest level since May 3.

AUD/USD Fundamentals

Friday (July 15)

• 8:30 US CPI. Estimate 0.2%. Actual 0.2%
• 8:30 US Core CPI. Estimate 0.2%. Actual 0.2%
• 8:30 US Retail Sales. Estimate 0.4%. Actual 0.7%
• 8:30 US Core Retail Sales. Estimate 0.1%. Actual 0.6%
• 8:30 US Empire State Manufacturing Index. Estimate 5.1. Actual 0.6 
• 9:15 US Capacity Utilization Rate. Estimate 75.2%
• 9:15 US Industrial Production. Estimate 0.2%
• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 93.7 
• 10:00 US Business Inventories. Estimate 0.1%
• 10:00 US Preliminary UoM Inflation Expectations

*Key releases are highlighted in bold

*All release times are EDT

AUD/USD for Friday, July 15, 2016

AUD/USD July 15 at 8:50 EDT

Open: 0.7611 High: 0.7676 Low: 0.7608 Close: 0.7654

AUD/USD Technical

• AUD/USD posted considerable gains in the Asian session but then retracted. The pair has posted slight gains in European trade and is steady early in the North American session
• 0.7739 is providing resistance
• 0.7612 was tested in support earlier and is a weak line. It could see action during the North American session
• Current range: 0.7612 to 0.7739

Further levels in both directions:

• Below: 0.7612, 0.7472, 0.7339 and 0.7251
• Above: 0.7739, 0.7835 and 0.7938

OANDA’s Open Positions Ratio

AUD/USD ratio is almost unchanged on Friday, consistent with the lack of movement from AUD/USD. Short positions have a small majority (46%), indicative of slight trader bias towards AUD/USD reversing directions and moving downwards.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.