The USD to AUD exchange rate has been on an upward trajectory since April, with the pair forming higher lows over this period. Recently, buyers have been making efforts to push the exchange rate above the 200-day Simple Moving Average (SMA), as indicated on the daily chart. Today, Australia released its retail sales report for April, with analysts anticipating a 0.3% increase in sales following a 0.4% decline in March.

The Australian dollar (AUD) faced downward pressure early last week following the release of Australia’s job data, which fell short of expectations. Despite this initial setback, the AUD/USD pair remains bullish overall, buoyed by a weaker US dollar (USD) and positive market sentiment. Notably, the pair breached above the 200-day Simple Moving Average (SMA) yesterday, signaling potential for further gains.

AUD/USD Chart Daily – Buyers Remain in Charge

This bullish sentiment is supported by the current risk-on environment and the overall depreciation of the USD. In terms of immediate support levels, the 200 SMA at 0.6620 is key to watch, with further support expected at the 100 SMA around 0.6590. On the upside, surpassing previous highs at 0.6720 would be necessary for the AUD/USD pair to continue its upward momentum.

Early today we had the retail sales from Australia, which was expected to show a return to growth in headline sales, after in March sales fell by 0.4%. Expectations were for a 0.3% increase last month.

April Retail Sales from Australia

The Australian Retail Sales data for April 2024 showed a modest increase of 0.1% month-on-month, slightly above the expected 0.2%. This follows a -0.4% decline in March, indicating some improvement but still reflecting a generally soft consumer spending environment.

Key Points:

• Retail Sales Data: The retail sales for April increased by 0.1% m/m, which is an improvement from the -0.4% decline seen in March. However, this slight rise is still a poor result considering the context of solid inflation and population growth.
• Consumer Spending: Despite the positive change from the previous month, consumer spending remains weak. High borrowing costs and elevated rents are significant factors weighing on consumer expenditure.
• Economic Context: The soft retail sales figures suggest that the Australian economy is still facing challenges in terms of domestic consumption, which is a critical component of economic growth.

AUD/USD Live Chart