The Australian dollar has posted gains in North American trading. AUD/USD is currently trading at 0.7754, up 0.34% on the day. On Tuesday, the pair pushed above the 0.7800 level for the first time since March 18th, but was unable to hold onto these gains.
Australian retail sales beat consensus
Australian retail sales rebounded in March with a gain of 1.4%, after a decline of 0.8% beforehand. This beat the forecast of 1.0%. Consumer confidence has been strong, and this translated into an increase in spending in March. The economy continues to grow after being reopened, and consumer spending is expected to be a key driver in the economic recovery. The RBA is projecting that GDP and employment will reach pre-pandemic levels later in 2021, which is 6-12 months faster than the central bank had expected.
In addition to stronger domestic demand, Australia stands 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 tight correlation with commodity prices.
The Australian economy may be headed in the right direction, but the RBA remains cautious and has signalled that it intends to continue its dovish stance. This was reaffirmed in the RBA minutes of the April policy meeting, which were released on Tuesday. The board stated that it remained committed to supporting the economy and would maintain a “highly supportive” monetary stance until the bank’s employment and inflation targets were met. As well, the board said the cash rate would remain at 0.10% for “as long as necessary” and left open the window for further bond purchases.
Later in the day, Australia releases the NAB Quarterly Business Confidence (1:30 GMT). The indicator posted a strong gain of 14 in February after five straight declines but is expected to slow to 7 points for March.
AUD/USD Technical
- AUD/USD tested resistance at 0.7801 on Tuesday and this 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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