Originally published by AxiTrader
The Australian dollar surged higher yesterday after the outsized 1.2% print for November retail sales. That data was much stronger than the market had anticipated. That surge gained further traction with the US dollar coming under pressure from a combination of a mildly hawkish ECB and the weaker than expected 0.1% print for December US producers prices - the first fall in 16 months.
So this morning that combination has the Aussie sitting at 0.7891 up 0.62%. That gain was only shaded by the New Zealand dollar's gain of 0.82% and the euro's 0.72% gain.
While it's possible to quibble about the distortive effect of the surge in iPhone sales which seems to have lifted retail sales in Australia and across the globe, with the launch of the iPhoneX the relaity is that the combination of October and November retail sales data goes a long way to assuage the fears of those worried that Australian households are under so much pressure that they will retrench and reduce consumption.
That in turn impacts expectations about the RBA.
And clearly data and fresh news is important to forex traders right now. So, on a day when China is going to report its latest trade and investment data it is worth highlighting the significant turnaround in dataflow in both China and Australia over thee past month.
The Citibank economic surprise index for China has improved from -28 at the end of November to sit at +18 today. Likewise the Australian dataflow has improved maerially as well with the Citi Eco Surprise Index having increased from -47.7 on December 12 to +24.7 after yesterday's retail sales release.
Little wonder the Aussie has been able to find a bid at a time of positive global sentiment toward growth.
Indeed, even though copper has lagged recently iron ore has continued to push higher and is only a few dollars now from the trendline stretching back to the record highs. That's a decent headwind for it and ultimately the Aussie dollar as well.
But for the moment the bulls have it. And with thee Aussie pushing through important fibo resistance at the 61.8% retracement level of the 81/75 move higher the chance of a run back to 81 cents grows.
Chinese data today could be influential and certainly US retail sales and CPI tonight will be big events as well.
Here's the chart:
Have a great day's trading.