The Australian Dollar is one of the weaker G10 currencies today following an unexpected drop in March retail sales. The report showed a decline across all subsectors except for food retail, which saw a 0.9% month-on-month increase. The clothing sector experienced the largest loss, declining by 4.3% month-on-month.
After the report's release, we observe declines in bond yields and the Australian Dollar. These declines extend the ongoing correction on the AUDUSD pair, which began after reaching a key resistance level around 0.65700. A single weaker report shouldn't affect interest rate trajectory in the longer term. However, if subsequent signals from the economy confirms this outlook, it could be a significant argument for the RBA. Retail sales are a key leading indicator directly correlated with inflation and growth prospects, potentially influencing the Reserve Bank of Australia's (RBA) hawkish stance on interest rate trajectory.
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Open account Try demo Download mobile app Download mobile appThe Australian Dollar was relatively strong last week following a higher-than-expected CPI report. Inflation rose by 3.6% year-on-year in the first quarter compared to expectations of 3.4%. The current baseline scenario still assumes the first rate cuts only towards the end of the year, with speculation on no cuts at all. Weaker retail sales reports may prompt a change in this perspective.
Currently, AUDUSD is down by 0.60% to 0.65270, extending the correction that began around 0.65700. The first support zone is between 0.64900 and 0.65200, making movement in this zone crucial for the further trend detection from a technical analysis perspective.
Source: xStation 5
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