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AUD/USD Recovers from 0.6900 as Australian Retail Sales Decrease Less than Anticipated
AUD/USD is seeing a bounce from 0.6900 as Australian Retail Sales fell 0.2% below predictions of -0.6%. The RBA is likely to raise interest rates by 25 basis points this week. A sharp increase in US Treasury yields has bolstered the theme of risk aversion.
As the Australian Bureau of Statistics published a smaller-than-anticipated decline in Retail Sales for the fourth quarter of CY2022, the AUD/USD pair has sought to recover to about 0.6900. The economic statistics has dropped by 0.2%, whereas 0.6% was projected by the market.
Tuesday's anticipated release of the Reserve Bank of Australia's (RBA) interest rate decision will be the most significant event that will cause volatility in the Australian Dollar. As the Australian Consumer Price Index (CPI) has not yet reached its top, forecasts for the policy stance are exceptionally hawkish. In the fourth quarter of CY2022, inflation in Australia reached a new peak of 7.8 percent.
Analysts at Deutsche Bank Australia anticipate that the RBA will likely raise the Official Cash Rate (OCR) to 4.1%, citing the latest inflation update, which revealed a slightly higher-than-anticipated 7.8% increase in the CPI. Forbes Advisor reports that "although the RBA will likely move more slowly in 2023 than in 2022, we now anticipate four further 25 basis point raises this year: 25 basis points in each of February and March, and 25 basis points at the May and August meetings."
In the meantime, the risk profile is supporting safe-haven assets following a massive increase in Nonfarm Payrolls (NFP) data in the United States. The US Dollar Index (DXY) hopes to increase its auction profile over 102.50. In the Asian session, S&P500 futures extended their downward trend, indicating a further fall in market participants' risk appetite. The yield on the 10-year US Treasury note has increased to about 3.57 percent.
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