- An unexpectedly shocking outcome in December retail spending data dragged the Australian dollar lower on Friday.
- Retail sales turnover was flat in December, according to the Australian Bureau of Statistics (ABS), coming in much worse than the market forecast of a 0.5% increase.
- At the same time on Friday the RBA released its quarterly Statement on Monetary Policy containing its updated economic forecasts.
- The bank's GDP growth and inflation forecasts were unchanged of its November forecasts but the RBA upgraded employment forecasts.
- The RBA now estimates that unemployment will continue to decline from its current level of 5.8%, whereas back in November the RBA said it expected the unemployment rate to hold between 6.0-6.25% over the next 12 months.
- Pair fell 0.30% to $0.7172 on Friday afternoon in Sydney from $0.7210 at the close of trade in New York on Thursday.
- A break of $0.7242 is necessary to confirm bullish trend.
- Alternatively, reversal from yesterday's high will drag the pair again below $0.7000 levels.
- Initial support levels are seen around $0.7153, $0.7107 and $0.7063 levels.
- On the top side, resistance levels are seen at $0.7243, $0.7287, $0.7333 levels.
We prefer to take short position in AUD/USD around $0.7218, stop loss $0.7242 and target $0.7107 levels.
