The Australian dollar chalked up another day in gains, thanks to better than expected economic reports. In today’s Asian trading session, Australia released its retail sales and trade balance data.
The retail sales report chalked up a 1.2% gain, stronger than the estimated 0.5% uptick, while the previous month’s report was revised up to 0.7%. Meanwhile, the trade balance also came in better than expected at a surplus of 1.43 billion AUD, higher than the projected 0.11 billion AUD figure and the previous 0.59 billion AUD surplus, which also enjoyed an upward revision.
Australian Dollar Fundamental Outlook
With that, fears of a potential currency intervention by the Reserve Bank of Australia (RBA) have been reduced, even as AUD/USD is trading close to the .9000 level. Recall that RBA Governor Stevens previously reiterated that the currency is still historically high and he’d ideally like to see it trading around .8600 to the dollar.
The strong trade balance figure also highlights the economy’s resilience, despite the recent slowdown in China. This Asian giant is Australia’s number one trade partner so a downturn in manufacturing could lead a lower demand for Australia’s commodity exports, which doesn’t seem to be the case for now.
Traders are starting to price in optimistic remarks from the RBA in the monetary policy meeting minutes about to be released more than a week for now. AUD/USD might stay supported against its currency rivals until then, provided that risk appetite stays in the markets.
Consecutive daily gains among global equities reflects the relief in the markets, as the political crisis in Ukraine seems to be showing signs of resolution. Unless tensions escalate once more or any other factors trigger a decline in risk appetite, AUD/USD might be able to stay supported and perhaps go for more gains in the near term.
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