Australian Dollar Rallies on Highest Retail Sales Growth in Years
- Australian retail sales growth at 1.2% m/m in November 2017, highest in about 5 years
- The Australian Dollar quickly became the best performing major in early Thursday trade
- Household goods consumption grew 4.5% ahead of the winter holidays, up from 0.2% prior
See how the Australian Dollar is viewed by the trading community at the DailyFX Sentiment Page.
The Australian Dollar was the benefactor of better-than-expected data yet again, a trend that has been persisting since mid-December 2017. Just on Tuesday, building approvals smashed forecasts. What was it this time? The highest retail sales growth in almost 5 years.
Australia’s households purchased retail goods which helped contribute to a 1.2% m/m growth outcome in November 2017. This was much higher than the decline to +0.4% expected from +0.5% in October. The category which expanded by the most was household goods clocking in at +4.5% from only +0.2% prior. Keep in mind that this was a month before the winter holidays of gift-giving.
Consumption certainly plays a key role in Australia’s economy and perhaps continued strength in the retail sector might boost economic conditions. Even so, the RBA seems to be in no rush to raise interest rates but the markets are pricing in around a 70% chance that one could happen by the end of the year.
On a daily chart, AUD/USD seems to be taking a breather after putting in a reversal that started on a long-term rising trend line from January 2016. The pair has now broken below a short-term rising trend line since the reversal.
Immediate support seems to be the 50% level at 0.7813 while resistance the 61.8% Fibonacci retracement level at 0.7887. A push above 61.8% puts the 76.4% level at 0.7978 in sight. If Aussie Dollar turns lower, the 38.2% Fibonacci retracement at 0.7739 will be exposed.
To add to that, the intraday IG client sentiment reading for AUD/USD now shows that traders are further net-short than yesterday and last week. The combination of current gives a stronger AUD/USD bullish contrarian bias.
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