Australia Retail Sales: how will the Aussie react?

Aussie retail sales overview

Australia will see the release of January's retail sales figures today at 00:30 GMT, and despite the Reserve Bank of Australia (RBA) dropping their Interest Rate Decision later at 03:30, the markets have already priced in a lack of movement from the RBA, so focus is expected to remain on the growth (or lack thereof) in retail sales, before Aussie GDP figures hit the markets on Wednesday at 00:30.

Retail sales figures have been volatile recently, with November sales soaring 1.3% only to slide backward by 0.5% to A$26.261 billion in December. January is expected to post a moderate rebound after deal-hunters splurged in November before cutting back in December, with a growing portion of the population taking advantage of spending-heavy days like Black Friday and Cyber Monday. Most of the major categories in retail spending declined in January, only partially offset by a lift in food purchases, and median analyst forecasts are calling for a 0.4% rise in the January figure; this falls in-line with the National Australia Bank's Cashless Retail Sales Index which has been a fairly accurate predictor of movement in the official figure, which indicates that sales likely grew by 0.4% or more for the period. However, a cautionary note from the Australian Industry Group (AIG) showed that the retail sector in Australia deteriorated by its fastest pace in February since mid-2012.

How will retail sales affect the AUD/USD?

March has been marked by Aussie consolidation just beneath the 200-day SMA, and the pair has declined steadily from a high point of 0.8135 reached in late January; the downtrend is beginning to show signs of exhaustion with technical indicators in increasingly bearish territory despite the price remaining near the previous swing low of 0.7760. Indecision between 0.7710 and 0.7770 currently binds the AUD/USD, and a break above or below this area could kick off a broader move.

Key notes:

AUD/USD: RBA has three reasons to be dovish

AUD/USD likely to break out

About retail sales

The Retail Sales released by the Australian Bureau of Statistics is a survey of goods sold by retailers is based on a sampling of retail stores of different types and sizes and it's considered as an indicator of the pace of the Australian economy. It shows the performance of the retail sector over the short and mid-term. Positive economic growth anticipates bullish trends for the AUD, while a low reading is seen as negative or bearish.