The Australian dollar loses land after disappointing retail sales data

• The Australian dollar fell after retail sales registered an increase of 0.2% monthly in May, compared to the expected increase of 0.4%.
• The AU could recover ground due to the improvement in the feeling of the market.
• The president of the FED, Powell, stressed the importance of evaluating more data before starting a relief of monetary policy.

The Australian dollar (AUD) slides downwards against the US dollar (USD) on Wednesday after the publication of weaker national economic data than expected. However, the aud/USD torque gained ground since the US dollar (USD) is maintained in the midst of an increase in the probabilities that the Federal Reserve (Fed) cuts interest rates.

The Australian Statistics Office (ABS) showed that retail sales increased 0.2% month by month in May, compared to 0% flat in April (reviewed from -0.1%). The reading was below the market expectations of 0.4%.

In addition, the Aud/USD torque was appreciated due to the improvement in the feeling of the market, promoted by the news that the main commercial officials of US President Donald Trump were looking for tariff agreements by phases with the most committed countries while they rushed to reach an agreement before the deadline of July 9, when Trump had promised to reimpose his most severe taxes, according to the Financial Times.

The Australian dollar falls while the US dollar stops its loss streak

• The US dollar index (DXY), which measures the value of the US dollar compared to six main currencies, is stopping its loss streak that began on June 19 and is quoted around 96.70 at the time of writing. The US employment change report for June will be at the Care Center later on Wednesday.
• The president of the Fed, Jerome Powell, reiterated on Tuesday that the US Central Bank will expect more data before beginning to relieve monetary policy, but did not rule out a reduction of rates at the July meeting.
• The US Treasury Secretary, Besent, said he believes that the Federal Reserve (Fed) will cut the interest rates before autumn, but will definitely cut the rates no later than September, according to Fox.
• Jolts employment offers in the US increased to 7.76 million in May, compared to 7,395 million offers reported in April. This figure was above the market expectation of 7.3 million.
• The US Senate has approved some version of the “Great and Beautiful Budget Law” of President Trump, which is now addressed to the US House of Representatives for a final approval and another vote. Trump, who campaigned to eliminate the Federal Deficit of the US, is ready to promulgate his bill of expenses, which will add billions of dollars to the US debt load during the next decade.
• The president of the United States, Donald Trump, could weaken the authority of the president of the FED, Jerome Powell, announcing his favorite candidate to lead the Central Bank next year. Trump said he has a list of possible Powell successors reduced to “three or four people”, without appointing the finalists. Chicago Fed president Austan Goolsbee said Thursday that political waves are not a factor in decision -making, nor would the appointment of a shadow president, according to CNBC.
• An US intelligence report indicated that American attacks on Iranian nuclear sites have delayed Tehran program only for a few months, according to Reuters. Iranian Foreign Minister Abbas Araghchi said Tehran has no intention of resuming nuclear negotiations with the United States, according to CNN.
• The Purchase Managers Index (PMI) Manufacturing Caixin of China improved 50.4 in June from 48.3 in May, according to the latest data published on Tuesday. Reading exceeded 49.0 market forecast. It is important to note that any economic change in China could impact the AU, since both countries are nearby commercial partners.
• The Purchase Managers Index (PMI) Manufacturing NBS of China advanced to 49.7 in June, compared to 49.5 in May. The data were in line with the market consensus in the month reported. The non -manufacturing NBS PMI rose to 50.5 in June compared to May 50.3 and the expected reading of 50.3.
• The purchasing managers index (PMI) Global S&P of Australia fell to 50.6 in June from the previous 51.0. Production decreased to its lowest reading since February due to adequate inventories of weakest customers and market conditions, they showed the data on Tuesday.
• The TD-MI inflation index rose 0.1% month by month in June, reversing an earlier fall of 0.4%. The increase occurred even when both general and underlying inflation continued to decrease within the target range of 2-3% of the Australian Reserve Bank (RBA).
• Australia’s private sector increased 0.5% month by month in May, compared to market expectations and the 0.7% increase in the previous month. The deceleration was mainly due to a slowdown in commercial loans, which were reduced to 0.8% from 1% in April.

The Australian dollar falls to about 0.6560 after retreat of maximum eight months

The Aud/USD pair is negotiating around 0.6570 on Wednesday. The daily technical analysis indicates a persistent bullish since the torque is maintained within the ascending channel pattern. The 14 -day relative force (RSI) index is positioned above the 50th mark. In addition, the pair rises above the nine -day exponential mobile average (EMA), indicating that the impulse of the short -term price is stronger.

On the positive side, the aud/USD torque could bounce towards the new maximum of eight months of 0.6590, which was recorded on July 1, followed by the upper limit of the upward channel around 0.6650.

The nine -day EMA at 0.6540 appears as the main support. A rupture below this level would weaken the impulse of the short -term price and put down pressure on the AUD/USD torque to test the lower limit of the upward channel around 0.6490, aligned with the 50 -day EMA at 0.6462.

AUD/USD: Daily graphic