The Aussie rose against the US dollar yesterday subsequent to the release of better than anticipated retail sales data for August. Additionally, the sharp decline in the US pending home sales and the higher than anticipated wholesale inventories also fueled the US dollar sell-off. Overall, the AUD/USD pair rallied from a low of 0.6370 to a high of 0.6785 in the past day.
As per the Australian Bureau of Statistics, the country’s retail sales rose by 0.60% m-o-m in August, following a 1.30% rise in the preceding month, and a notch higher than the 0.50% growth anticipated by economists.
On a y-o-y basis, Australia’s retail sales surged 19.20% in August 2022.
While food retailing grew by 1.10% (or A$142.50 million) in August, household goods retailing increased 2.60% (A$157.20 million). Clothing, footwear, and personal accessory retailing declined 2.30% (A$68.10 million) in August. Department stores recorded a growth of 2.80% (or A$52.80 million) in August. Other retailing declined 2.50% (or A$137.40 million). Cafes, restaurants, and takeaway food services increased by 1.30% (or A$65.30) in August.
According to the US Census Bureau, for the fifth successive month, the country’s goods trade deficit narrowed to $87.30 billion in August, from $90.20 billion in the previous month, and bettered forecasts for a trade deficit of $88.90 billion. The reported deficit is the lowest since October 2021.
Goods exports fell by $1.70 billion (m-o-m) to $179.80 billion in August. Likewise, imports of goods declined by $4.60 billion (m-o-m) to $267.10 billion.
According to the preliminary data published by the Census Bureau, wholesale inventories grew by 1.30% m-o-m in August to $913.10 billion, following a 0.60% rise in the preceding month. Economists had anticipated the wholesale inventories to increase only by a maximum of 0.40% in the reported period.
On a year-on-year basis, wholesale inventories surged 25.10% in August 2022.
Retail inventories grew by 1.40%m-o-m in August to $741 billion, compared with a rise of 1.1% in July. On a y-o-y basis, retail inventories jumped 21.60% in August 2022.
As per the National Association of Realtors, the US pending home sales declined 2% m-o-m in August, following a decline of 0.60% in the previous month. The reported figure was worse than the 0.90% drop anticipated by economists. Also, the data reflects a third successive monthly decline.
On a year-on-year basis, pending home sales plunged 24.20% in August 2022. The reported figure reflects the largest yearly fall since April 2020.
The weak US economic data is expected to keep the AUD/USD pair range bound with a slight bearish bias in the days ahead.
The historical price chart reveals that the AUD/USD currency pair is increasing after testing the support at 0.6370. The next resistance is predicted only near 0.6670. The money pair is trading above its 50-day moving average while the stochastics indicator is climbing towards the bullish zone. Consequently, we anticipate the currency pair to continue in an uptrend in the days ahead.
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.
