Retail Sales overview

Early Wednesday, the market sees the preliminary reading for the March month Retail Sales data from Australia at 01:30 GMT. Following the downbeat prints in February, Aussie retail activity has been a little stronger amid easing virus-led restrictions and festival season. As a result, today’s initial figures suggest 1.0% growth in the key economics versus -0.8% prior contraction.

Ahead of the release, Westpac said,

Westpac looks for a -1.5% decline. Although we should see a rebound in WA and Vic where lockdowns ended, March saw more disruptions: another mini-lockdown in Qld that impacted Easter holiday-related activity; and severe floods in parts of NSW (including Sydney) and Qld. There are also signs that retail is easing in areas where the COVID reopening is more advanced – reflecting both waning 'catch-up' demand and a shift back towards non-retail spending. Our Westpac Card Tracker suggests total retail sales fell sharply in March although this does not capture 'cash' spending.

Analysts at TD Securities sound a little less upbeat on the data while saying,

We expect a strong rebound in retail sales in Mar at 2.5% m/m (cons: 1.0%), from -0.8% m/m in Feb.  To recap, the surprise dip in retail sales in Feb primarily reflected weaker sales in Vic and WA which were both subject to covid-19 restrictions over the month.

How could it affect AUD/USD?

AUD/USD pokes the upper-end of the latest trading range while picking up bids near the intraday high of 0.7733. In doing so, the aussie pair consolidates the previous day’s pullback from a one-month high after upbeat Westpac Leading Index, 0.38% MoM versus 0.01% prior, as well as the local news that Australia can build Pfizer and Moderna-line covid vaccines. It should, however, be noted that the anticipated time for such manufacturing was mentioned as three years and the coronavirus (COVID-19) woes weigh on the AUD/USD prices.

The easing of virus-led lockdowns in the key part of Australia, followed by festival season, suggests an uptick in Retail Sales and may offer a mild uptick in AUD/USD should it match the upbeat market forecasts. However, any disappointment from the data will add to the pair’s latest pullback moves from the multi-day top.

Technically, AUD/USD stays above the 50-day SMA level, around 0.7720, on a daily closing despite the latest pullback, which in turn keeps buyers hopeful to aim for the 0.7800 resistance.

Key Notes

AUD/USD to revisit the 0.80 level around mid-2021 – NAB

AUD/USD struggles to keep 0.7700 on US dollar bounce ahead of Aussie Retail Sales

About 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.