The Australian dollar remained weak against the greenback in the final trading session of last week after the release of weak retail sales data for April. The unexpectedly strong US durable goods orders data for April also enabled the greenback to consolidate its ground. Overall, the AUD/USD pair traded in a range of between 0.6490 and 0.6544.
According to the Australian Bureau of Statistics, the country’s retail sales remained unchanged in April, compared with the previous month, at A$35.30 billion. In March, Australian retail sales grew by 0.40% on a m-o-m basis. Economists had anticipated a 0.30% increase in retail sales.
Notably, retail sales have been on the rise for the last three months, primarily due to an increase in consumer spending on winter clothing. This negated the decline in spending on discretionary goods against the backdrop of an increase in interest rates.
Food retailing declined 0.10%m-o-m in April. Likewise, cafes, takeout food, and restaurants recorded a 0.20% drop. In the meantime, sales of footwear and clothing rose by 1.90%. Also, department stores recorded an increase of 1.50%. On a y-o-y basis, Australian retail sales grew by 4.20% in April 2023.
According to the US Census Bureau, the country’s durable goods orders rose by 1.10% m-o-m in April, following a 3.30% increase in the previous month, which pleased economists who were expecting a 1% increase.
Orders for transport equipment grew by 3.70%. Likewise, machinery posted an increase of 1%. While computers and electronic products fell by 1.40%, electrical equipment, appliances, and components grew by 1%. Durable goods orders for non-defense capital goods, excluding aircraft, increased by 1.40% in April.
According to the US Census Bureau, the country’s goods trade deficit widened to $96.80 billion in April from $82.70 billion in the previous month, worse than forecasts of $85.60 billion.
Goods exports were $163.30 billion in April, down $9.50 billion from March. However, goods imports rose by $4.50 billion in the same period to $260 billion.
In a separate news release, the Census Bureau stated that wholesale inventories declined 0.20% m-o-m in April to $914.90 billion, following a 0.30% decrease in the prior month. On a y-o-y basis, wholesale inventories rose by 6.20% in April 2023.
Retail inventories stood at $772.30 billion in April, an increase of 0.20% from March and 7.70% from April 2022.
According to the revised data published by the University of Michigan, the US consumer sentiment index declined to 59.20 in May from 63.50 in April and was greater than forecasts of 58.20. The preliminary estimates had pegged the consumer sentiment index reading at 57.70.
Also, the current economic conditions index declined to 64.90 in May from 68.20 in April. Likewise, the index of consumer expectations fell to 55.40 from 60.50.
The weak Australian retail sales data is expected to keep the AUD/USD pair slightly bearish in the short term.
The historical price chart indicates that the AUD/USD pair is declining after facing resistance at 0.6640. The next major support is anticipated only near 0.6410. Additionally, the currency pair is trading below its 50-day moving average, while the stochastic indicator is in the bearish zone. Therefore, we anticipate the AUD/USD pair to remain in a downtrend in the short 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.
