- Australian dollar extends gains
- Australian retail sales expected to decelerate to 0.1%
The Australian dollar has extended its gains at the start of the week. In the European session, AUD/USD is trading at 0.6603, up 0.28%. The Aussie has posted an impressive streak, rising 3.8% against the greenback since November 14th.
Australia releases retail sales for October on Tuesday. The consensus estimate stands at a negligible 0.1%, compared to a strong 0.9% gain in September. The sharp gain, which indicated resilience in consumer spending, provided support for the RBA to raise rates at the November meeting. If retail sales misses the estimate, it could sour sentiment towards the Aussie and send the currency lower. RBA Governor Michele Bullock will speak at an event in Hong Kong on Tuesday and investors will be looking for hints about what the RBA is planning at its meeting on December 5th.
RBA to undergo major overhaul
Changes, big changes are coming to the Reserve Bank of Australia. The Australian government announced it would introduce legislation to overhaul the central bank. This follows an independent review which called for sweeping changes at the RBA. There has been much criticism of the RBA for its pledge not to raise rates before 2024, only to embark on a tightening campaign which has raised the cash rate to 4.35%. The new Governor, Michele Bullock, has said she is favour of the changes.
Last week, Bullock said on Tuesday that inflation has peaked and that the upside risk to inflation was domestic and demand-driven. Bullock noted that inflation had dropped from 8.0% to 5.5% in less than a year, but it would take much longer for inflation to drop that amount again and fall to 3%. The RBA’s target range is 2%-3%. The RBA remains hawkish and raised rates earlier this month after holding rates for four straight times..
- AUD/USD is putting pressure on resistance at 0.6618. Above, there is resistance at 0.6650
- 0.6559 and 0.6526 are providing support