The Aussie rose against the loonie yesterday following the release of higher-than-anticipated inflation data for Australia. The inflation data has stoked up bets for another rate hike by the RBA (Reserve Bank of Australia). On the contrary, Canada’s retail sales data for February missed estimates. This enabled the AUD/CAD pair to rally from a low of 0.8861 to a high of 0.8916 in the past 24 hours.
According to the data published by the Australian Bureau of Statistics, the country’s consumer price index rose by 1% q-o-q in the March 2024 quarter following a 0.60% rise in the December 2023 quarter and surpassed forecasts of 0.80% growth.
The increase was led by a 2.10% q-o-q rise in rents in the March 2024 quarter. Likewise, secondary education grew by 6.10%. Also, medical and hospital services posted an increase of 2.30%. Electricity prices declined 1.70% in the March 2024 quarter. This follows an increase of 1.40% in the 4Q23 quarter.
Furthermore, Australia’s consumer price index grew by 3.60% over the 12 months to the March 2024 quarter, a decrease from 4.10% in the previous quarter but a notch higher than forecasts of a 3.40% increase. Annual inflation for non-tradable was 5%, a decrease from 5.40% in the December 2023 quarter. The annual inflation rate for tradable goods is significantly lower at 0.90%, compared with an increase of 1.50% in the December 2023 quarter and a decrease from the high of 8.70% in 2022.
Rental prices increased 7.80% annually, reflecting the robust rise since the March 2009 quarter. Similarly, electricity prices rose by 2%, following a 6.90% increase in the 12 months to December 2023.
Insurance prices increased 16.40% annually, reflecting the strongest annual growth since 2001. Annual food inflation eased to 3.80% in the March 2024 quarter, a decrease from 4.50% in the December 2023 quarter and a high of 9.20% in December 2022.
According to Statistics Canada, the country’s retail sales inched down 0.1% m-o-m in February to C$66.70 billion following a 0.30% decrease in the previous month, missing forecasts of 0.10% growth.
Sales decreased in five out of nine subsectors. Specifically, gasoline stations and fuel vendors posted a decrease of 2.20% m-o-m in February. In volume terms, sales at gasoline stations and fuel vendors declined by 3.90%.
In volume terms, retail sales fell by 0.30% in February.
Excluding gasoline station fuel vendors and motor vehicle and parts dealers, Canada’s core retail sales stood unchanged in February. General merchandise retailers recorded a growth of 1.10% in February. Health and personal care retailers posted a growth of 0.40%.
Retail e-commerce sales grew by 1.90% in February to C$3.80 billion, representing 5.70% of total retail trade, compared with 5.60% in January.
As per the advance estimate provided by Statistics Canada, the country’s retail sales stood unchanged in March.
The solid Australian inflation data and weak Canada’s retail sales data are expected to keep the AUD/CAD pair slightly bullish in the short term.
The historical price chart indicates that the AUD/CAD pair is ascending after testing the support at 0.8810. The next resistance is anticipated to be only near 0.9010. Additionally, the currency pair is trading above its 50-day moving average, while the stochastics indicator is in the bullish zone. Therefore, we anticipate the AUD/CAD pair to remain in an uptrend in the near term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
