Aussie Down as Retail Sales Halves in September

Aussie Down as Retail Sales Halves in September
November 5, 2019


The Aussie declined against the greenback after the data published by the Australian Bureau of Statistics indicated a sharp decline in retail sales in September, led by a drop in consumer spending in spite of systematic interest rate cuts. From a high of 0.6920, the AUD/USD pair declined to a low of 0.6905 in the past 24 hours.

Retail turnover increased 0.2% m-o-m in September, but down from the 0.4% growth recorded in the earlier month. Economists had anticipated sales growth to remain unchanged at 0.4%.  Other retailing increased 0.8% and cafes, takeaway services, and restaurant turnover grew 0.6%. Food retailing increased 0.1%. These increases were offset slightly by a drop in clothing, personal accessory retailing, footwear and department stores. In the third quarter, retail sales declined 0.1%, negating a 0.1% increase in the earlier period.

Marcel Thieliant, an economist at Capital Economics, opined that the drop in real retail sales in Q3 2019 indicates that consumption growth remained gloomy. The economist further stated that the fourth-quarter outlook doesn’t present a rosy picture, considering the fact that the bulk of the tax refunds were already paid.

JP Morgan economist Tom Kennedy acknowledged that the data presented today was not up to expectation. Nevertheless, Kennedy did not change his view that disposable earnings growth associated with fiscal and monetary easing will aid real spending by the end of 2019. The economist believes that it will lead to a slight acceleration in spending.

The Reserve Bank of Australia (RBA) has slashed benchmark interest rates thrice this year. The prevailing cash rate of 0.75% is the lowest on record.

In other economic news, data published by ANZ indicated that advertisements related to jobs declined 1% m-o-m in October, following an increase of 0.3% in September. Advertisements related to jobs had declined 11.4% on a y-o-y basis.

Catherine Birch, a senior economist at ANZ, opined surprise about resilience in job growth. “The ANZ Job Ads series has been pointing to a material slowdown in employment growth for some time; yet employment growth has been remarkably resilient. We don’t expect it can hold up for much longer though.”

Technically, the AUD/USD pair has formed a double top at 0.6920. The currency pair has also broken below its 50-day moving average. Additionally, the oscillator of the moving average is having a negative reading. As a result, we can expect the currency pair to remain bearish in the short-term.

AUD - technical analysis - 5th Nov 2019

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Janine is our editor for related stock market news. Andrew and Janine will be focusing on providing the latest trends and where the next hit could be

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