AUD vs USD advances due to solid retail sales figures. The odds of an RBA hike suspension are increasing in future

AUD vs USD BASELINE BACKGROUND

In the Asian session, the AUDUSD gained momentum with a retest of the 0.6700 level, aided by slightly better-than-expected retail sales data. The initial MoM retail sales figures indicated a sharp decline from the 1.8% figure in Jan.  But came in at 0.2% versus forecasts of 0.1%. The US Dollar’s sluggish beginning to the week and an increase in risk perceptions have both benefited the Australian dollar.

Source: Australian Bureau of Statistics

AUDUSD gets a boost from Current retail sales data and upcoming data expectations

The retail sales report might be a sign of the lagging effects of the RBA’s rate increases and a signal that consumers are controlling their spending. Given the domestic as well as the global environment, this makes the argument for a break by the RBA at its coming April meeting all the more convincing.

We do have a lot of economic risk factors coming up this week, beginning with the US CB Consumer Confidence data released today. And continuing through the GDP and the Fed’s preferred inflation measure, the Core PCE numbers. Which are scheduled to be released on Thursday and Friday, respectively.

From the Australian front, the next release of the CPI figures could further support a breather from the RBA. While a higher-than-expected number might cause those bets to lose steam before the April summit.

Scheduled Economic Events

Technical Perspective and Review

As sentiment increases, the US dollar has had a disappointing start to the week. The Australian dollar could rise further today in anticipation of tomorrow’s release of the inflation figures.

Since bottoming out on March 10, the technical forecast for the AUDUSD shows greater highs and deeper lows. However, the price continues to trade below the crucial 0.6700 mark and has been unable to gain any momentum above.  If we gain a little steam over the 0.6700 level today prior to the publication of the CPI statistics.  The 200-day MA, which is located above the 0.6750 handles, could limit any gains.

An alternative scenario would be for the price to move back toward the 0.66250 support zone and possibly retest the YTD at 0.6560. If the 0.6700 resistance level is rejected today and the dollar bears return.

Daily Graph, March 8

Source: TradingView

IMPORTANT RESISTANCE LEVELS

0.6750 (200-Day MA)

0.6830 (50-day MA)

Critical Support Levels

0.6625

0.6560 (YTD Low)