The Aussie dollar is being offered after the official data showed consumer spending as represented by the retail sales unexpectedly dropped 0.1% m/m in March, compared to the expected figure of 0.3%.
The AUD/USD pair dropped to a 4-month low of 0.7364 levels.
The horrible retail sales figure is another evidence of hard data lagging the soft data (sentiment indices), which remain strong. The NAB business conditions and confidence indices printed at multi-year highs yesterday.
The situation is similar to what we are seeing in the US, but the Aussie side of the story still looks relatively weak due to housing market concerns and the weakness in the commodity prices.
The focus now shifts to Turnbull’s budget. The AUD could catch a bid later today if the government adopts an expansionary fiscal policy.
AUD/USD Technical Levels
The daily RSI is sloping downwards and is yet to hit the oversold territory, suggesting potential for more losses. A break below 0.7311 (Nov 21 low) would open up downside towards 0.7285 (June 16 low) and 0.7223 Dec 20 low). On the higher side, breach of 0.74 (psychological level) could yield a re-test of 0.7440 (Apr 27 low) and 0.7447 (10-DMA).