Aussie holds at two-month highs

Daily Currency Update

The Australian Dollar is holding itself around the two-month high levels despite weaker-than expected economic figures. Retail sales came in below the consensus at 0.1% where there was an expectation of a 0.2% rise for the month of May thinking that the economy would receive a boost from the election campaign. Sadly, the numbers add to a disappointing weak quarter for household consumption. In more detail, discretionary spending was a shade better than the April numbers, Household goods and café spending also up but the clothing retailers, department stores and food all fell. AUD/USD showed resilience and jumped 10 points touching a high of 0.7047, a level not witnessed since early May.
Looking ahead, the domestic docket sees the release of the AiG Construction Index which will be looked upon for fresh clues on the health of the Australian construction industry. Also, tonight investors will be focused on US data which will see the release of government nonfarm payrolls report for June along with wage growth and unemployment figures. A weak payroll outcome would certainly bolster the case for a rate cut from the Federal Reserve, particularly given the data follows a poor result in May.
Adopting a technical viewpoint, Aussie is currently trading at 0.7022, we see initial AUD/USD support at 0.7000 (psychological level) before 0.6955 on the downside. On the topside, first lines of resistance are seen at a level of 0.7050 followed by 0.7070.