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XTB TRADEBEAT

AUD gains post retail sales, Wall Street bounces back

Summary:

  • Australian dollar together with the NZ dollar are the strongest currencies in early trading, retail sales helped the Aussie
  • Chinese services PMI disappoints in March, composite PMI slips to the lowest since November
  • Wall Street shakes out as tech stocks recover, Williams named the new chairman of the New York Federal Reserve branch

Global financial markets settled down to some extent after having a tumultuous beginning to the new quarter. The US indices gained momentum yesterday on talks that the US-China trade dispute will not derail economic growth and hopes that US President Donald Trump is not actively looking to challenge Amazon’s business in spite of the fact he attacked the company. As far as the currency market is concerned, the Australian dollar is by far the best performing one in the morning being shored up by the upbeat reading of domestic retail sales for February. It grew as much as 0.6% mom beating forecasts at 0.3% mom. The country’s bureau of statistics added that growth was led by household retailing, food retailing, restaurants as well as clothing and personal accessories.

link do file download linkAustralian retail sales bounced in February but the underlying trend remained tilted to the downside. Source: Macrobond, XTB Research

Despite a decent improvement of retail sales the underlying trend is far from being tilted to the upside as consumers could still feel slow real wage growth being a drag on their outlays. Either way, annual growth jumped to roughly 3% and the details of the release suggest that a jump was mainly driven by discretionary goods. While retail sales turned out to be AUD positive, building approvals disappointed in the same month. It dropped 3.1% yoy largely missing the consensus set at 0.3% yoy. However, the disappointment was less visible in a monthly basis as there was a 6.2% decline against an expected 5% decrease. Do notice that the trend has moderated of late albeit at relatively high levels. Finally let’s add that Chinese Caixin services PMI came in at 52.3 falling short of the consensus at 54.5 and making a notable dip compared to 54.2 points seen in February. By and large, composite PMI slipped from 53.3 to 51.8 reaching its lowest point since November last year.

link do file download linkThe AUDUSD broke a short-term resistance line placed a notch below a 0.80 handle nevertheless bull ran into another hurdle in case of a descending trend line. They have been unable to move through it as of yet therefore one may suspect that USD buyers have yet to be doomed to failure. However, while AUD buyers manage to keep the price below the trend line, a move toward 0.7770 should be attainable. Source: xStation5

After having the ugly beginning to the new quarter US equities recovered yesterday as tech stocks trimmed some of their prior losses. The Dow Jones (US30 on xStation5) jumped the most gaining as much as 1.65% whereas its peers rose 1.25% (US500) and 1.05% (US100). Do notice that stock markets got a double whammy at the beginning of the week as a tech stocks slump accelerated and a trade war between the US and China reignited. Otherwise, it’s worth mentioning that John Williams will take over a post of the New York Federal Reserve chairman effective on 18 June replacing William Dudley. Bear in mind that the NY branch is the most important one as it actually helps set the Fed’s key funds rate via its trading desk.

link do file download linkWhile the SP500 closed below its 200DMA the US30 is still hovering above this kind of line. The key support zone might be localized in the vicinity of 23200 points and until the price keeps moving above it bulls could be positioned to take control anew. Source: xStation5

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