The Australian dollar is stuck in a range

Source: Star Wars/Lucas Films
  • The Australian dollar fell marginally on Monday, weighed down by renewed strength in the greenback.
  • Weakness in the euro helped push the US dollar index to a fresh 4-month high.
  • Australia’s federal budget and retail sales report for March will be released today.

The Australian dollar fell marginally on Monday, weighed down by renewed strength in the greenback.

Here’s the scoreboard at 7am AEST.

AUD/USD 0.7517 , -0.0023 , -0.31%
AUD/JPY 82.00 , -0.08 , -0.10%
AUD/CNH 4.7799 , -0.0001 , 0.00%
AUD/EUR 0.6304 , 0.0011 , 0.17%
AUD/GBP 0.5544 , -0.0015 , -0.27%
AUD/NZD 1.0710 , 0 , 0.00%
AUD/CAD 0.9682 , -0.0001 , -0.01%

The story of the session was once again renewed US dollar strength, helped on this occasion by weakness in the euro.

The EUR/USD dipped to as low as 1.1816 following the release of soft German industrial orders and eurozone investor sentiment, leaving it at the lowest level since late December.

That helped to boost the US dollar index, or DXY, which rose to the highest level since December 28, extending its rally from mid-February to 5.4%.

That weighed on most major currencies during the session, including the Aussie dollar which lost around 0.3% against the greenback.

AUD/USD Hourly Chart

Turning to the day ahead, there’s a number of key releases scheduled both in Australia and abroad on Tuesday.

Domestically, Australia’s March retail sales report will be released at 11.30am AEST.

Economists expect an increase of 0.2%, down from 0.6% in February. Individual forecasts range from a decline of 0.1% to a gain of as much as 1.2%.

Being the end of the quarter, the ABS will also release retail sales volumes with an increase of 0.5% expected. Retail sales accounts for around a third of household consumption, the largest component in Australian GDP.

An increase of 0.5% will add around 0.1 percentage points to Q1 GDP.

Outside Australia, China will also release international trade data for April at some point after midday AEST.

Over the year, exports and imports are expected to increase by 6.3% and 16% respectively. The trade surplus is tipped to lift to $US24.7 billion, a reversal of the $US5 billion deficit recorded in March.

New Zealand inflation expectations for the March quarter will also be released by the Reserve Bank of New Zealand at 1pm AEST. This has often moved the New Zealand dollar in the past.

Later in the session, Australia will also receive its federal budget at 7.30am AEST.

Given the amount of leaks seen in the lead-up to the event, it will likely have minimal impact on financial markets.

“We will learn the detail of planned tax cuts for low and middle income earners, new infrastructure spending plans across all states and territories, and that the Medicare Levy increase previously planned from 2019 will not now proceed<" says Ray Attrill, head of FX Strategy at the National Australia Bank (NAB). "Doubtless there are other pre-election lollies to be handed out. "We expect the ratings agencies to be favourable impressed by the Budget, but whether it will be enough to see S&P dropping its negative outlook on the AAA rating remains to be seen." Elsewhere, other highlights today include German industrial production and trade figures, house price data from the UK, a speech from US Federal Reserve chair Jerome Powell and NFIB small business optimism and JOLTS job openings from the United States.

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