Fundamental Analysis for AUD/USD: April 6, 2016
After months of rally, the Australian dollar finally experienced a setback as the week started with disappointing data and a slowly recovering US dollar.
Retail sales for the month of February was unchanged from the previous month’s 0.3 percent, a big letdown from the forecasted 0.1 percent increase.
According to the Australian Bureau of Statistics, retail sales of household goods and department stores posted the highest increases with 0.4 percent, while the food sector decreased by 0.2 percent.
During Tuesday’s monetary policy meeting, the Reserve Bank of Australia (RBA) decided to hold onto its 2.00 percent interest rate, sending the AUD to the bears. RBA governor said in a statement that the “economy is continuing to rebalance following the mining investment boom.”
Contrary to an expected verbal intervention to weaken the AUD, Stevens did not jawbone the currency which has risen steadily since the start of the year, even sounding dovish toward its appreciating value.
Inflation hit a seven month low of 1.7 percent while the RBA’s target range is from 2 to 3 percent. Trade deficit rose to A$3.410 billion in February from January’s A$3.156 billion. It was projected to shrink to A$2.600 billion.
After days of losses, the USD picked up over the weekend due to a positive nonfarm payroll that further strengthened the labor market.
The pair touched 0.7536 today, recording a five-day low. Heads are now turned to Fed’s meeting later today.