AUD/NZD drops on retails sales miss, eyes on daily swing lows of 1.0430
- AUD/NZD has dumped on the back of the Aussie data dump where retails sales was a big miss.
- AUD/NZD was down -0.2% overnight at 1.0495, thanks to the poor Australian building approvals data ahead of today's data dump and RBA, but now trades at 1.0465 at the time of writing, with a fresh low of 1.0462, so far.
Ahead of the RBA, the Dec trade surplus was expected to bump up to +$A2.8b (mkt +$A2.225b) due to exports +1.6%/m as LNG flows and -1%/m decline in imports (prior record imports from China reversed).
Retail sales for Dec and Dec qtr was expected to be flat/m and +0.7%/q respectively (mkt flat and +0.5%/q). For the month, was expected at 0.1%.
However, the data arrived as follows:
- Australia Retail sales for December: -0.4% m/m (vs. expected 0.1%) vs prior 0.4%.
- The surplus for Dec was a positive with the Australia trade balance for December AUD + 3681m (vs. expected AUD +2225m).
RBA outlook:
Looking ahead, we have the RBA decision later today as the main event. However, its the Lunar New Year holidays in Asia so trade will be thin.
Analysts at TD Securities explained that it is the first communication from the Bank since early December:
"After extending the record pause in the 1.5% cash rate, the markets eagerly await the RBA’s take on recent market turmoil and Fed pause as well as changes to the forecasts. The most obvious alteration will be a downgrade in the near-term growth outlook."
The analysts also argued that one should not expect the policy statement to repeat that the next move is up for the cash rate, that will be in Friday’s Statement on Monetary Policy.
"Our China-based factor model puts AUDNZD around 1.06, which could start to benefit if growth and trade tensions start to improve. Finally, our implied-CTA model also implies that the market is leaning short AUD/NZD,"
analysts at TD Securities explained.
AUD/NZD levels
Technically, the pair was consolidating following the correction of the daily downtrend's recovery attempt, moving sideways with a hint of bearishness. Indicators, however, are mixed, with flat turning bearish RSI and relatively bearish MACD, with the price smothered by 4hr and daily MAs as the price struggles to gain upside traction. First downside target is 1.0430 as the daily swing lows. The 112.7% Fibo extension is located at 1.03363 beyond S3 located down at 1.0381.