Intent to keep the price movement at the middle of the trading week, the US dollar is anticipated to give in to the rally of its Australian counterpart. Traders are deemed to be willing to take in more of the riskier commodity dollar after earlier reports that Australian consumer sentiment surged to a 26-month high. Market participants are also likely to look into consumer spending data from the world’s largest economy today.
As the increased payroll taxes began to hit US consumers at the start of the year, it would be of importance how consumer spending held up in January, what with talks of sequestration from President Obama’s State of the Union speech. Median expectations place a decline to 0.1 percent figure on US retail sales for January. A similar decline to 0.1 percent in retail sales excluding autos in January is also forecast. Slower gains in the retail sales figures are seen to shift the focus away from the Greenback to the stronger Aussie today.
In fact, the Australian currency rose against most of its major peers after its gauge of consumer confidence reached more than a two-year high. The said increase likewise eases expectations that the central bank will cut interest rates sooner. Swaps traders reduced bets that the Reserve Bank of Australia will lower the overnight cash-rate target from 3 percent in March.
“The odds of a RBA rate cut in March have now slipped a little bit” after the release of the consumer-confidence survey, said Jonathan Cavenagh, a currency strategist in Singapore at Westpac Banking Corp. “The near-term risks are that it can head higher,” he said, referring to the Australian dollar.
Considering the adverse effect of these fundamental data on the Greenback, a buy position is advised for the AUDUSD today. It is still pertinent to look out for probable technical corrections on the currency pair’s movement.
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