AUD to USD Forecast: Australian Retail Sales Unexpectedly Fall 0.2% in October

Highlights

• The AUD/USD gained 0.41% on Monday, ending the session at $0.66063.
• On Tuesday, Australian retail sales figures garnered interest before CPI numbers on Wednesday.
• US consumer confidence and Fed speakers are focal points later in the session.

Overview of the AUD/USD for Monday

The AUD/USD gained 0.41% on Monday. Following a 0.36% rise on Friday, the Aussie dollar ended the day at $0.66063. The Aussie dollar fell to a low of $0.65668 before rising to a high of $0.66141.

Australian Retail Sales Ease Hawkish RBA Bets

On Tuesday, Australian retail sales garnered investor interest as investors attempted to second-guess the next RBA move.

Retail sales declined by 0.2% in October after rising by 0.9% in September. Economists forecast a 0.1% rise.

According to the ABS,

• Food retailing increased by 0.5%, while household goods retailing declined by 0.6%.
• Clothing, footwear, and personal accessory retailing slid by 1.0%, with department store sales down 0.6%.
• Cafes, restaurants, and takeaway food services reported a 0.4% decline, with other retailing falling 0.4%.

Softer consumer spending eases demand-driven inflationary pressures and the need for a more hawkish RBA rate path. While retail sales were down in October, retail sales increased 1.2% year-over-year.

Beyond the numbers, investors must monitor stimulus chatter from Beijing. Hints of further measures to support the Chinese economy could drive buyer demand for the AUD/USD.

US Consumer Confidence and Fed Speakers in the Spotlight

Later in the session, US consumer confidence and Fed speakers will warrant consideration. A slide in consumer confidence could signal a weaker consumer spending outlook. Downward trends in consumer spending would ease demand-driven inflation and the need for a hawkish Fed rate path.

Significantly, US private consumption contributes over 60% to the US economy. A marked slump in consumer confidence could reignite fears of a hard landing. Economists forecast the CB Consumer Confidence Index to decline from 102.6 to 101.0 in November. A drop below 100 could spook the markets.

Other stats include house price figures. However, barring an unexpected fall in house prices, the reports will likely play second fiddle to the CB Consumer Confidence Report.

With consumer confidence in the spotlight, Fed speakers could also influence the appetite for the US dollar. FOMC members Austan Goolsbee, Christopher Waller, Michelle Bowman, and Michael Barr are on the calendar to speak.

Short-Term Forecast

Near-term AUD/USD trends will hinge on Australian and US inflation numbers. Sticky Australian inflation and softer US inflation figures could tilt monetary policy divergence further toward the Aussie dollar.

AUD/USD Price Action

Daily Chart

The AUD/USD remained above the 50-day and 200-day EMAs, sending bullish price signals. Notably, the Aussie dollar broke above the trend line on Monday.

An AUD/USD hold above the trend line would support a breakout from the $0.66162 resistance level to target the $0.66500 handle.

After the retail sales report, Beijing, US consumer confidence, and Fed speakers remain focal points today.

However, a fall below the trend line would bring the 200-day EMA into play. A fall through the 200-day EMA would give the bears a look at the $0.64900 support level.

A 14-period Daily RSI reading of 66.42 indicates a move through the $0.66162 resistance level before entering overbought territory (typically above 70 on the RSI scale).

4-Hourly Chart

The AUD/USD held above the 50-day and 200-day EMAs, affirming bullish price signals.

An AUD/USD break above the $0.66162 resistance level would support a move toward the $0.67286 resistance level.

However, a fall through the trend line would bring the 50-day EMA into play. A drop below the 50-day EMA would support a fall toward the $0.64900 support level.

The 14-period 4-Hourly RSI at 64.94 indicates an AUD/USD break above the $0.66162 resistance level before entering overbought territory.