Australian Retails Sales significantly improves

Australian retailers experienced the best sales data in twelve months last quarter. This can be put down to discounts pushing goods off of shelves. Consumer spending is helping the Australian economy maintain momentum.

Data from the Australian Bureau of Statistics (ABS) showed that the June quarter rose to 1.2%; the best outcome in more than a year and above the 0.8% estimation.

This is good news as retail sales has been poor of late. Australians have been forced to spend their hard earned money on necessities rather than luxury products due to high living cost and poor wage growth. This has hit inflation which has put back any chance of a rate hike from the Reserve Bank of Australia (RBA).

On Tuesday we will see the Australian Interest Rate decision during the early hours. Despite the recent boost in retail sales I would be surprised to see any movement from 1.5%.

I am of the opinion the market mover will be the speech following the decision by RBA Governor Philip Lowe. This will occur on Wednesday during the early hours. He could give a hint to monetary policy moving forward. If rates remain unchanged, I think he will give a positive outlook and that a chance of a rate hike is on the cards which has the potential to boost Australian Dollar value.

If we look at GBP/AUD in more detail I think Sterling has been lucky not to have fallen further against the Aussie. The trade war between the US and China has caused investors to move away from riskier commodity based currencies in search of a safe haven.

The trade war affects the Aussie due to Australia’s heavy reliance on China purchasing it’s exports. If China’s growth begins to slow this is likely to in turn hit the Aussie.

If you have to move short term buying AUD aim for 1.77. The 1.75 resistance point is currently being tested. For more information on the factors likely to impact these rates feel free to get in touch using [email protected].

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