Australian dollar remains firm, awaits retail sales data

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Having fallen to as low as .7150 in European trade, having explored above the .7200 level post Tuesday’s RBA monetary policy meeting, the Australian dollar recovered over North American trade, basically sitting where Asia left it just below the .7200 level.

Strength in commodity currencies on the back of a near 4% surge in crude price, along with a modest bid in US stocks, helped overcome further price weakness in Australia’s chief commodity export, iron ore.

As at 8.30am AEDT, the AUD/USD currently buys .7187, nearly a cent above Tuesday’s opening level of .7117.

AUD/USD 5-minute chart

In what is a common theme in research reports received so far this morning, analysts are near unanimous that Australia’s retail sales report for September, due out later this morning, will likely provide the catalyst for volatility during Wednesday’s session.

“At 11.30 AEDT, we get local trade balance and retail sales data. The latter will likely get more attention,” wrote Raiko Shareef, currency strategist at BNZ.

“NAB is picking an above-consensus 0.7% m/m gain, taking cues from our online retail sales report. We pick a slightly worse trade deficit than consensus, at $3.24b.”

Aside from the domestic retail sales and international trade reports, markets will also be paying attention to the Caixin-Markit China services PMI report that will be released at 12.45pm AEDT.

China’s services sector, growing in importance as the economy transitions to an economy more reliant upon consumption and services, needs to remain strong in order to offset weakness in heavy industry. Any signs of weakness will be dealt with harshly by the markets.

Later in the evening we’ll also hear from US Federal Reserve Chair Janet Yellen along with New York Fed President Bill Dudley. There are also a raft of services PMI reports released, including from the US.

Here’s the current Aussie dollar scoreboard.

  • AUD/USD 0.7187 , 0.0044 , 0.62%
  • AUD/JPY 86.95 , 0.71 , 0.82%
  • AUD/CNY 4.5535 , 0.0269 , 0.59%
  • AUD/EUR 0.6554 , 0.0072 , 1.11%
  • AUD/GBP 0.4658 , 0.0025 , 0.54%
  • AUD/NZD 1.0716 , 0.0135 , 1.28%

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