Despite weak retail sales, the Australian dollar remains stable.
The Australian dollar has gained ground in the Friday session. The AUD/USD currency pair is currently trading at 0.7256, up 0.28 % on the day. The Australian dollar has had a fantastic week as market sentiment has strengthened. This week, the AUD/USD has risen 1.57 % and is well into 72-territory.
Australia’s retail sales are declining.
Retail sales are the primary indicator for measuring consumer spending, which is a major economic driver. The news in Q2 was worse than expected, with Retail Sales falling by -2.7 % (est. -2.3 % ). This was much lower than the -1.8 % release in the first quarter. However, investors ignored the lackluster statistics because the Australian dollar is still in positive territory.
Australia, formerly dubbed the “Covid paradise,” has seen an increase in new instances of the Delta Covid variety. Australia reported around 1,000 new cases on Thursday, the highest total since the pandemic began in 2020. If Covid numbers continue to climb, there is rising danger that the economy could enter a recession.
With a 1.8 % increase in the first quarter, Australia’s economy exhibited solid growth (QoQ). However, there are fears that growth may have dropped to less than 1% in Q2. On Tuesday, Australia’s GDP for the second quarter will be released. A disappointing GDP figure could dampen the Australian dollar’s rise.
The market will be focused on today’s Jackson Hole symposium, which will feature Fed Chair Jerome Powell’s highly anticipated address. Three of the Fed’s most hawkish members urged the central bank to trim its asset purchases sooner rather than later ahead of the meeting. The three members, Robert Kaplan, James Bullard, and Esther George, are non-voting members, but their message reflects the Fed’s strong support for beginning a taper soon before or after December. However, the Fed’s view is far from unified, and markets are anticipating a more dovish posture from Powell, which might result in a weaker US currency.