- Australian retail sales hiked by 0.9% in November, as per the Australian Bureau of Statistics.
- Westpac says the rise in retail sales may be attributed to Black Friday & late effects of 2019's monetary adjustments.
- Analysts recommend caution as the increase in retail sales may not be sustainable.
- AUD/USD hiked from around .6850 to .6910 on Friday.
The Australian Bureau of Statistics revealed the monthly retail sales report on Friday. Printing significantly better than the forecast, the economic data stirred volatility in the forex market. Australian retail sales remained capped at 0.1% in October, following which, analysts had anticipated a further 0.4% expansion in retail sales in November. As per the report on Friday, however, Australia saw a much larger increase in its monthly retail sales at 0.9%.
Westpac Says The Increase In Retail Sales May Be Attributed To The Black Friday
According to Westpac analyst, Matthew Hassan, the sharp improvement in Australian monthly retail sales is attributed to the holiday season (Black Friday) as well as the delayed impact of the monetary policy adjustments that were made earlier in the year. The Reserve Bank of Australia announced three rate cuts in 2019 in June, July, and another in October. The report also highlighted the traditional retail to have lifted up in November as well.
The 0.9% gain in the monthly retail sales report marked the best for Australia since November 2017. In terms of annual growth, the bureau of statistics announced a 3.2% increase. Following the monetary adjustments, the Australian Central Bank expects to add as much as $16.6 billion to household disposable incomes by June 2020. As per Friday’s economic data, the increase in retail sales in November is still only worth $250 million.
Analysts Recommend Caution As The Increase In Retail Sales May Not Be Sustainable
According to the experts, while the rise in November’s retail sales is good news for Australia, it can be speculated that the rise may not be sustainable in the upcoming months. Analysts attributed the hike to the temporary nationwide increase in Black Friday’s popularity. They further pointed out that the business and consumer sentiment, as per the surveys, have remained under pressure in Australia in the past few months. The recent widespread fire that killed billions of animals and threatened the Australian ecosystem is also likely to weigh further on the sentiment in the months to come.
The technical analysts reported a downward sloping trend in AUD/USD that started in mid-2018. The currency pair has dropped from a high of .7675 to as low as .6675 during this time period. Towards the end of the last year, the pair broke above the 200 Day Moving Average that was located around .6900 at the time. It then challenged the descending channel’s upper trendline. AUD/USD hiked from around .6850 to .6910 on Friday. The pair closed the last week at 0.6898 on Friday.