Partner Center Find a Broker

Gold and Australia’s data releases dictated the Aussie’s price action last week. What could influence its price action this week? Here’s a list.

Retail sales (May 8, 1:30 am GMT)

An upbeat reading in March did Aussie bulls a favor in last month’s release. See, retail sales rebounded by its fastest rate since November 2017 as sales of clothing, footwear, and personal accessories while sales increased at a faster pace for other categories.

This time around analysts are estimating a 0.2% uptick in April after March’s 0.6% increase. Take note, however, that china will also print its trade balance and foreign direct investments numbers.

This means that, unless the retail sales report shows significant upside or downside surprise, it’s likely that reactions will be muted in preparation for China’s releases.

China’s economic reports

As mentioned above, the world’s second largest economy will also be publishing economic reports this week.

This includes the trade balance and foreign direct investments on Tuesday; new loans on Wednesday, and CPI and PPI growth on Thursday.

As Australia heavily relies on China’s demand for its exports, it’s important to pay close attention to China’s economic health. Make sure you keep your eyes glued to the tube!

Last Week’s Price Review

The Aussie is on track to close out the week on a mixed note (as of 6:00 am GMT). However, that doesn’t mean that the Aussie was taking its marching orders from its peers since AUD pairs actually had roughly uniform price action.

Overlay of AUD Pairs & Gold (Black Line): 1-Hour Forex Chart
Overlay of AUD Pairs & Gold (Black Line): 1-Hour Forex Chart

As always, AUD pairs were taking directional cues mainly from gold prices. And since gold had a rough time during the first half of the week, the Aussie also ended up getting pushed below last week’s closing prices (dashed horizontal line).

Other than gold prices, risk sentiment also apparently had an effect on the Aussie’s price action.

This is very likely why the Aussie only grudgingly tracked gold prices lower on Monday when risk-taking prevailed.

Another example is during Tuesday’s Asian session since gold prices slipped but the Aussie traded broadly higher, likely because of the risk-on vibes at the time. The Aussie did eventually succumb to falling gold prices after the RBA announced no changes to its monetary policy, though.

Aside from risk sentiment and gold prices, there were also other factors that helped to drive the Aussie’s price action. And these include a couple of positive Australian economic reports on Thursday.

Australia’s trade report, in particular, is really good since it revealed that Australia had a trade surplus of A$1.53 billion (A$0.7 billion expected), thanks to exports expanding by 1.0%.

Moving on, the Aussie also got a bullish kick when the RBA released its Statement on Monetary Policy on Friday, very likely because traders were surprise to know that the RBA upgraded its forecasts for core inflation, as highlighted below.

May Statement on Monetary Policy
May Statement on Monetary Policy
February Statement on Monetary Policy
February Statement on Monetary Policy

Other than that, the RBA also reiterated its hawkish bias when it noted that:

“If the economy continues to perform as expected, higher interest rates are, however, likely to be appropriate at some point.”

However, the RBA was also quick to add that:

“Notwithstanding this, the Board does not see a strong case for a near-term adjustment in the cash rate.”

And that’s probably why there was no follow-through buying and the Aussie turned to gold prices and risk sentiment for direction.