AUD/USD climbs above 0.6900, boosted by Australian Retail Sales and soft US dollar

• AUD/USD advances close to 0.25% on Monday, trimming some of last Friday’s losses.
• Last week’s Fed’s rhetoric put a lid on the AUD/USD gains.
• Australian Retail Sales were better-than-expected, propelled by tourism.

AUD/USD reclaims the 0.6900 figure after hitting a six-week low at around 0.6840 in the North American session amidst a risk-off mood, spurred by last Friday’s Fed’s Powell hawkish rhetoric, sending US equities tumbling on average almost 3%, between the S&P 500, Nasdaq and the Dow.

The AUD/USD opened below last Friday’s close and edged towards 0.6840 before recovering some ground, reaching a daily high at 0.6925 before settling around current spot prices. At the time of writing, the AUD/USD is trading at 0.6907, above its opening price by almost 1%.

AUD/USD edges higher on positive AUS data, weaker US dollar

The Australian dollar gains are courtesy of a weaker US dollar, as shown by the US Dollar Index, down 0.09%, at 108.736. Additionally, commodity prices led by crude oil and Iron Ore are bolstering commodity-linked currencies, like the AUD, the NZD, and the CAD.

US equities are extending their losses following Jerome Powell’s last Friday remarks, saying that the Fed’s primary goal is bringing inflation to its 2% goal even if it spurs slow growth and “pain to households and businesses.” He added that “without price stability,  the economy does not work for anyone.”

On Friday, US economic data revealed that the core PCE deflator, the Fed’s favorite inflation measure, increased by 0.1% MoM, less than estimated. Nevertheless, the three-month annualized figure is still high, and as Powell welcomed the data, he reiterated that the Fed needs to go to restrictive territory. Later, the UoM consumer sentiment improved to 58.2, reflecting lower gasoline prices.

In the Asian session, Australian Retail Sales for July, on its preliminary reading, came better than estimated, up by 1.3%, bolstering the AUD/USD. According to ANZ analysts, Aussie sales were bolstered by tourism and returning residents.

“We noted last month that very negative net arrivals in June may have been key to the weakness in retail sales growth, rather than the start of a consumer slowdown. We will be watching net arrivals as a signal for retail sales growth in the near term since the two datasets have been moving together in recent months,” ANZ analysts wrote.

AUD/USD Key Technical Levels