The Australian dollar posted gains in North American trading. AUD / USD is currently trading at 0.7754, up 0.34% on the day. On Tuesday, the pair broke the 0.7800 level for the first time since March 18, but was unable to hold onto those gains.
Australian retail sales exceed consensus
Australian retail sales rebounded in March with a gain of 1.4%, after declining 0.8% previously. This beat the forecast by 1.0%. Consumer confidence was strong, which translated into increased spending in March. The economy continues to grow after it reopens, and consumer spending is expected to be a key driver of economic recovery. The RBA predicts that GDP and employment will reach pre-pandemic levels later in 2021, 6 to 12 months faster than the central bank had forecast.
In addition to stronger domestic demand, Australia is expected to benefit from a more robust global economy, which will translate into stronger demand for Australian exports. This bodes well for the Australian dollar, which has a close correlation with commodity prices.
The Australian economy may be heading in the right direction, but the RBA remains cautious and has indicated it intends to maintain its accommodative stance. This was reaffirmed in the RBA’s minutes of the April political meeting, which were released on Tuesday. The board said it remained committed to supporting the economy and would maintain a “very favorable” monetary stance until the bank’s employment and inflation targets are met. Additionally, the board said the spot rate would stay at 0.10% “as long as needed” and left the window open for further bond purchases.
Later today, Australia publishes the NAB Quarterly Business Confidence (1:30 GMT). The indicator posted a strong gain of 14 in February after five consecutive declines, but is expected to slow to 7 points for March.
AUD / USD technical
- AUD / USD tested the resistance at 0.7801 on Tuesday and it remains a weak line. Above there is resistance at 0.7869
- On the downside there is support at 0.7626. Below we find support at 0.7519
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