- Australia’s trade balance came in well below market expectations
- Retail sales for July missed too
- The Australian Dollar stumbled, but retains clear support at elevated levels
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The Australian Dollar took a modest tumble Thursday as a bunch of key economic data out of its homeland missed market forecasts.
Official retail sales figures were flat on the month in July. Investors had been looking for a 0.2% rise to follow June’s 0.3% gain. They didn’t get it, obviously. Consumer spending seems once again to have been reined in by slow wage growth – a long-time concern of the Reserve Bank of Australia.
July’s trade balance missed the mark by an even bigger margin. Australia was still in surplus, to the tune of AUD460 million (US$368 million), but the markets had hoped for a billion-dollar figure. Exports were a major contributor to second-quarter Gross Domestic Product growth. This is a first look at the third-quarter’s showing and it didn’t impress. Exports slipped 2% on the month, with imports down 1%.
Still, the Australian Dollar didn’t fall very far in the data aftermath and clearly remains quite well supported, especially against the greenback. In recent days data disappointments have been quickly overcome by AUD/USD buyers who often return within minutes. In this case, the pair slipped back under the psychologically important US$0.80 level- at which the bulls have usually run out of enthusiasm this year – but not very far under.
More broadly, the Australian Dollar continues to gain against its US big brother, having inched back towards its 2017 highs this week. Much of the process seems attributable to general US Dollar weakness. However the RBA has been vocal in lamenting the effects of a high exchange rate on its home economy and investors are now waiting to see if this rhetoric ramps up again as AUD/USD pushes on.
— Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX