The Australian dollar’s multi-day decline extended overnight due to dovish comments from RBA deputy governor Debelle coupled with softness in commodity and European equity markets. With markets adopting a risk-off modd, the Aussie dipped below the key 0.72 handle, touching intraday lows of 0.7192 before being bid back up to 0.7225. Continuing its recent trend the AUD/NZD cross also fell to 1.0476, representing it’s lowest level since July 2017.
Recapping yesterday’s retail sales numbers, retailers reported a 0.3% increase in sales for the month of October which was largely in line with market expectations. Whilst sales growth is still not strong by historical standards, analysts were quick to point out the numbers are looking much stronger than they did in the mid-year read. Last night also saw RBA deputy governor deliver a speech in which he stated there is still scope for reductions in the cash rate if economic conditions demanded it and also suggested the bank could deploy QE if a future crisis presented itself. He did reiterate that the next move in the cash rate would likely be up but highlighted tightening credit standards as an area of concern.
Domestic releases are done for the week as the Aussie will now look to Non-Farm payrolls due out of the world’s largest economy tonight. Markets are expecting a rise of 198K after last months blockbuster beat and will also be paying close attention to consumer sentiment data and some Fedspeak on financial stability from board member Brainard.
On the technical front we see minor support for the AUD/USD around the 0.7190 region however expect any moves through this level to test the 0.7130 handle. On the topside, 0.7280 has now become the first line of resistance heading into today’s session.