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Forex: AUD/USD spikes to fresh weekly highs on better domestic data than expected

Aussie has spiked moderately to the upside printing fresh session and weekly highs at 1.0224 following better than expected domestic data. Retail sales for the month of January jumped to +0.9%, best result since Jun last year, and much better than the +0.4% expected and -0.4% for Dec, revised lower from -0.2%. Current account deficit also showed a better than expected result in the data, down -14.7B vs -15.4B. The pair is currently pull backing a bit from mentioned highs, last at 1.0210.

AUD/USD has managed to recover from a fresh 8-month low yesterday at 1.0116, back above previous weekly close around 1.0205, now about flat for the week. All focus now shifts to RBA rate statement at 03:30 GMT, where almost everybody expects no changes, and cash rate futures price in less than 15% chance of a move. “Whilst that would not be unexpected, I would see some downside risk for the AUD immediately post meeting if they do retain their full easing bias,” says FXWW founder Sean Lee.

Immediate resistance to the upside for AUD/USD shows at mentioned fresh weekly highs/Feb 21 lows 1.0220, followed by Mar 01 highs at 1.0240, and Feb 18 lows at 1.0275. To the downside, closest support lies at Feb 27/Mar 01 lows 1.0180, followed by Sept 05 lows at 1.0162, and Oct 08 lows at 1.0145.

Australian retail sales Jan stronger-than-expected

Australian retail sales came much better-than-expected at 0.9% on the month of January vs 0.4% expected, which makes the positive deviation of 0.5bp a potential driver to take out 1.0220/25 resistance. However, with the RBA monetary decision ahead at 3.30GMT, investors may prefer to stay on the sidelines until further clarity on the central bank's statement is given. In a parallel data published, Q4 net export contribution stood at 0.6 points vs 0.5 points expected.
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Forex Flash: RBA to hold, statement key - NAB

It would be a surprise if the RBA didn’t leave rates on hold today, the ultra-dovish NAB team says: "For the AUD today, with expectations for any change in rates from the RBA this afternoon running so low (17%) its more likely that fresh AUD direction for the currency will come from the tone of the statement" the bank adds. They also note recovery in Chinese stocks and the just released improved Australian retail sales as the other main driver on the Aussie today.
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