It was a rollercoaster ride for the Australian Dollar yesterday thanks to local macroeconomic data released locally. The AUD/USD opened around the 0.7225 level but was quickly sold off to a low of 0.7193 as Retail Sales numbers for December showed it’s biggest decline in twelve months. Sales dropped 0.4% and left the annual growth rate below the long-run average and steady at 2.8%. Meanwhile, trade surplus widened to 3.68B, beating the forecasted rise to 2.3B from the November figure. The uptick in surplus, however, is largely driven by a 6 percent drop in imports. Imports were down 0.9% in the year, the first annual decline in over two years. Exports overall were also weaker in December, falling 1.6%. The annual pace of growth, however, remained firm at 16.2%, reflecting resilience in prices of most commodities.
The Reserve Bank of Australia left the cash rate on hold at 1.5% as expected, in the statement sounded less dovish than expected and maintained a fairly optimistic view on the economy. The RBA indicated that it downgraded its GDP growth forecasts for 2019 from 3.25% previously to around 3% amid falling house prices in Australia and uncertainty over household spending. The AUD/USD pair rallied over 70 pips pushing back through 72c and touching a high of 0.7263.
Looking ahead, RBA Governor Philip Lowe is due to speak at the National Press Club, in Sydney.