Australian Dollar Slide Halted After Retail, Job-Ad Data

2017-03-06 01:26:00

David Cottle, Analyst

Talking Points:

The Australian Dollar got a lift from as-expected retail sales and an on-year gain for job ad totals
On-month ad figures were gloomier but data compiler ANZ thinks there are mitigating factors
The Reserve Bank of Australia sets policy on Tuesday, and is expected to hold rates steady

The Australian Dollar slipped then recovered nicely on Monday following the release of as-expected official retail sales data for January

Seasonally adjusted sales rose 0.4% on the month, having fallen by 0.1% in December. For the year sales were up 3.1%. Pressure on household spending is known to bother the Reserve Bank of Australia, but these latest data suggest that it is at least holding up.

The RBA will make a monetary policy decision on Tuesday. The market overwhelmingly expects that the current, record- low Official Cash Rate of 1.50% will endure, as it has since last August.

Job advertisement figures from lender ANZ were released at the same time as the sales numbers, and they were a little gloomier, at least on the month. Advertisement numbers fell by 0.7% in February, having risen by 3.9% the month before. However, compared to February 2016 they were up by 6.9%.

ANZ noted the strong annualized growth and said that the market remains fundamentally strong.

“Looking ahead, strength in business conditions, firms’ profitability and an increase in capacity utilization all point to an improvement in labor market conditions in our view.”

The Australian Dollar had been tracking lower as the Asian trading week got under way. The words of a plethora of recent Federal Reserve speakers, including Chair Janet Yellen, have markets ever more convinced that higher US interest rates are coming this month.

However, AUD/USD gained after the data, if not by much. It rose to 0.75808 in the aftermath, from 0.75770 just before.

Fighting back: AUD/USD