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Australian Dollar Lifted By Consensus-Smashing Retail Sales

Australian Dollar Lifted By Consensus-Smashing Retail Sales

David Cottle, Analyst

Talking Points

  • The Australian Dollar got a lift as official retail sales figures smashed forecasts
  • Capital expenditure data missed, but nobody seemed too worried about that
  • A manufacturing index released earlier found that sector still in rude health

So, it’s your favorite currency. Who agrees? Check out our sentiment page for an idea of the company you’re in.

The Australian Dollar spiked up sharply Thursday on news of a sold beat for official retail sales figures.

April sales rose a perky 1% on the month, far better than the 0.3% gain expected and more than strong enough to banish memories of the previous month’s 0.1% fall. Australian Dollar bulls liked this a lot, understandably, and sent AUD/USD up in the aftermath:

Australian Dollar Lifted By Consensus-Smashing Retail Sales

And the retail figures enabled investors to gloss over simultaneously-released news that capital expenditure had missed forecasts. Its 0.3% first-quarter gain was below the 0.5% expected, although the previous quarter’s fall was revised to 1%, from an initially reported 2.1%.

Earlier Thursday the Performance of Manufacturing Index from the Australian Industry group registered May as an eighth straight month of expansion, albeit at a slower pace.

This measure is analogous to the Purchasing Managers Indexes released globally in that any reading above 50 signifies expansion. May’s came in at 54.8, below April’s 59.2. The AIG reported that all seven sub-indexes which contribute to that headline had risen, but not as fast as in the previous month. That said, new-order levels remained high suggesting that the current growth period retains traction.

Still, there may not be much in any of this data deluge of this for Australian monetary-policy watchers. The Official Cash Rate remains at its 1.50% record lows and, while investors think it may go no lower, no rises are baked into futures markets for at least 18 months down the track. Like many Asia/Pacific central banks, the Reserve Bank of Australia is at least as wary of elevated global uncertainty as it is confident in its home economy’s domestic profile.

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--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter:@DavidCottleFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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