The rally in the Australia dollar stalled overnight

Photo by Paul Gilham/Getty Images

The rally in the Australian dollar stalled overnight despite strength in stocks and crude oil, raising questions over whether its stellar run of late is over.

The AUD/USD eventually finished the session buying .7695, down 0.1% from Wednesday’s close.

It briefly traded above .7750 on Thursday before succumbing to selling pressure, as was the case on Wednesday.

Is the top in, or is the Aussie merely pausing before taking a run at the yearly high of .7735 that was seen in April? That’s the question many will be asking themselves at present.

AUD/USD Daily Chart

In an outcome that will no doubt help to find an answer, there’s major data releases in China and the US on Friday that will almost certainly generate some volatility in the Aussie.

At midday in Sydney (10am in Beijing), Chinese industrial output, retail sales and urban fixed asset investment figures for July will be released.

Industrial output is expected to grow by 6.1% from the levels of a year ago, down from 6.2% in June, while fixed asset investment is tipped to have grown 8.8% between January to July compared to the same period a year earlier.

Retail sales is forecast to come in at 10.5%, below the 10.6% annual pace reported previously.

“All eyes on today China data dump, although FX traders are not as sensitive to China data as it once was,” says Christ Weston, chief markets strategist at IG Markets. “That could change soon, but for now as long as volatility is low then traders will gravitate to long AUD positions.”

After the Chinese data has passed, market attention will switch to the US where retail sales figures for July will be released.

“Consumer spending was one of the positive from the anaemic Q2 GDP growth print and as such the market will be looking to see if household spending will continue to boost the economy in Q3,” said Rodrigo Catril, currency strategist at the NAB.

“So far in August the USD has struggled against most currencies as the market has pulled back on expectations of Fed hikes this year.

“However, given the rather subdued consensus for the July retail numbers, a solid print could well be the catalyst for a rebound on the big dollar,” he adds.

A headline increase of 0.4% is expected. Of more importance to markets, sales ex-autos are tipped to grow 0.2% while the retail sales control group, used in GDP calculations, is forecast to rise 0.3%.

Alongside the retail sales report, markets will also receive US producer price inflation figures for July along with consumer confidence from the University of Michigan survey.

All the action kicks off from 10.30pm AEST.

Here’s the current Aussie dollar scoreboard (8.05am AEST):

  • AUD/USD 0.7700 , 0.0005 , 0.06%
  • AUD/JPY 78.48 , 0.03 , 0.04%
  • AUD/CNH 5.1136 , 0.003 , 0.06%
  • AUD/EUR 0.6911 , 0.0003 , 0.04%
  • AUD/GBP 0.5940 , 0.0001 , 0.02%
  • AUD/NZD 1.0678 , 0.0013 , 0.12%

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