AUD/USD in a holding pattern ahead of Australia retail sales data
- The Australian dollar is at a key level ahead of Australia retail sales data.
- On Wednesday, data showed that the country’s economy is recovering.
- Analysts are watching US stimulus progress.
The AUD/USD is wavering ahead of the latest Australian retail sales and trade data. The Aussie is trading at 0.7810, which is slightly below the intraday high of 0.7838.
Australia retail sales data ahead
The Australian Bureau of Statistics (ABS) will publish the latest retail sales and trade numbers tomorrow. Economists expect that the country’s retail sales increased by 0.6% in January.
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Also, they expect that the country increased its exports and imports in January. In December, Australia’s exports increased by 3% while imports fell by 2% leading to a trade surplus of more than A$6.7 billion.
These numbers will come a day after the bureau published relatively strong Australian GDP data. The numbers revealed that the economy expanded by 3.1% in the fourth quarter after expanding by 3.4% in Q3. On an annualised basis, the economy contracted by 1.1%. Analysts were expecting an annual decrease of 1.8%. On Tuesday, the AUD/USD also reacted to the RBA interest rate decision.
The AUD/USD is also reacting to the commodities market. This week, most commodities have been relatively muted as traders wait for the outcome of the US stimulus talks. While the House of Representatives has passed Joe Biden’s package, there is no indication about how the Senate will vote.
A large US stimulus package will be a good thing for the Australian dollar for two reasons. First, in theory, it will lead to higher commodity prices. The Aussie is often seen as a proxy for commodity prices. Second, it will lead to a stronger Chinese economy since the US buys most of its goods from China. The Australian dollar is often viewed as a proxy for the Chinese economy.
The AUD/USD is hovering around 0.7810. This is an important support level since it was the highest level on January 6 and 7. On the four-hour chart, the pair is slightly above the 15-day and 25-day exponential moving average. Also, it seems to be forming a bullish flag pattern while the Relative Strength Index (RSI) has continued rising.
Therefore, a volume-supported rise above yesterday’s high of 0.7838 will be a victory for bulls. It will open the possibility of the pair rising to the next resistance at 0.7900.