Strong Retail Sales and Falling Trade Deficit Boost AUD

Late yesterday, The Australian Bureau of Statistics (ABS) reported that retail sales in March rose in most sectors, especially in footwear and personal accessories (0.7%) and household goods (0.2%). This boosted March’s total turnover (seasonally adjusted) to a rise of 0.4%, higher than the 0.3% increase expected by economists. On a yearly basis, retail sales edged up 3.6%.

Also published by ABS on Wednesday was the trade deficit for March. The deficit has been narrowing, coming in at A$2,16 billion in March, the lowest level since June 2015. The value of imports was up 1% from the reading in February to A$28.7 billion in March. Meanwhile, exports witnessed an increase of 4% to A$3.04 for the same period. All readings are in seasonally adjusted terms.

In the US, non-manufacturing sector extended its growth for 75 straight months as indicated by the latest ISM Non-manufacturing PMI. The index jumped to 55.7 last month, 1.2% higher than the reading of 54.5 in the preceding month, reflecting a slightly faster pace of growth in the non-manufacturing sector of the economy.

ADP non-farm employment change was also released yesterday, reporting 156,000 jobs created in April. This reading did not meet economists’ forecast of 205,000 jobs created in April.

In response to mixed data, the dollar index DXY moved in uncertain fashion for a while and then climbed up to 93.62, about 0.4% higher than the last close.

Currently, the market is focusing on the Department of Labor report on Unemployment claims with a forecast of 216,000 people filing for unemployment benefits during the past week. Also being watched is a scheduled speech by FED member Bullard, for hints on future U.S monetary policy.

audusd d1

Fig. AUDUSD D1 Technical Chart

Due to the weight of the RBA’s decision to cut interest rates two days ago, the Aussie has tumbled, leading AUDUSD to enter the oversold territory. The level 38.2% of Fibonacci retracement was hit and is likely to become a support for prices. A reversal into an uptrend is expected to happen in the near future. The green SAR arrow under the price chart still suggests a buying position.

Trade suggestion

Buy at 0.74978, Stop loss at 0.74361, Take profit at 0.75628

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