When are the Australian retail sales/ trade data and how could they affect AUD/USD?

Australian retail sale/ trade balance overview

Recent disappointments from Australia push traders to remain cautious ahead of main event risks in the form of monthly retail sales and trade balance data slated for release at 00:30 GMT on Thursday. Australia's seasonally-adjusted monthly retail sales are expected to rise +0.3% in January versus the previous reading of -0.4% contraction.
On the other hand, the consensus forecasts are calling for Australia's January month balance of trade to flash a soft figure of $3.0 billion AUD, down from the last reading of AUD 3,681 million. The Australian exports in December last came in at -2%, while Imports for the same period arrived at -6.

About the data, Westpac says,

As the market focuses increasingly on the timing of RBA cash rate cuts, Australia’s data momentum will draw extra interest. At 11:30am Syd/8:30am Sing/HK we see Jan retail sales and trade balance. After a dismal -0.4% in Dec, consensus on retail sales is +0.3%, on the assumption that seasonal adjustment has not caught up to a shift of spending from Dec to Nov (Black Friday). However, Westpac looks for a weak -0.1%, given the slide in consumer sentiment in Jan and other surveys indicating a slowdown.

Australia’s $3.7bn trade surplus in Dec was the second largest on record, capping a year of strong improvement in the trade position, brushing off fears over the US-China trade war. But imports fell unexpectedly sharply in Dec so we look for a 4% rebound in Jan. If exports rise the 2.2% we expect, the surplus will shrink to a still historically large $3.1bn. Consensus is $2.8bn.

Meanwhile, TD Securities also have their forecasts ready for the events and say,

We look for retail sales to add +0.2%/m (mkt +0.3%) as recent lumps drop out and lower fuel prices and buoyant consumer sentiment remain supportive. We look for the trade surplus in January to be boosted by record Chinese imports from Australia as well as rising LNG exports as capacity comes on-stream. An expected rebound in imports (+1%, prior -8.1%) still generates a decent +$A4.3b trade surplus for January (mkt $A2.9b).

How could they affect the AUD/USD?

Given the latest pessimism surrounding Aussie economy, the AUD/USD is likely to extend its southward trajectory towards 0.6980 in a case scheduled data show another negative sign of the struggling economy and highlight the risk of RBA’s rate cut. The pair might not refrain from revisiting the 0.6910 and 0.6830 levels if 0.6980 fails to stop the bears.

In the case where actual results portray upbeat scenario of the Aussie economy drivers, the reaction to the data may be short-lived/ limited, as the broader events like RBA meeting, GDP and Governor Lowe’s speech haven’t been in favor of the Australian Dollar (AUD). Herein, the AUD/USD pair may take the opportunity to challenge 0.7055 and 0.7080 nearby resistance ahead of confronting 50-day simple moving average around 0.7130.

Key Notes

AUD/USD struggles to recover from 2-month lows, stays dangerously close to 0.70

AUD/USD testing the vicinity of key 0.7020 territory

AUD/USD Technical Analysis: Aussie is at a stone’s throw from 0.7000 figure

About the Australian retail sales

The Retail Sales released by the Australian Bureau of Statistics is a survey of goods sold by retailers is based on a sampling of retail stores of different types and sizes and it''s considered as an indicator of the pace of the Australian economy. It shows the performance of the retail sector over the short and mid-term. Positive economic growth anticipates bullish trends for the AUD, while a low reading is seen as negative or bearish.

About the Australian trade balance

The trade balance released by the Australian Bureau of Statistics is the difference in the value of its imports and exports of Australian goods. Export data can give an important reflection of Australian growth, while imports provide an indication of domestic demand. Trade Balance gives an early indication of the net export performance. If a steady demand in exchange for Australian exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the AUD.