After spending the past seven trading sessions in the red, the Australian dollar was gaining ground versus the US dollar across the European session on Friday. At the time of writing the Aussie dollar was trading 0.45% higher at US$0.6888.
Data published by the Australian Bureau of Statistics showed that Australian retail sales rose by 0.9% month on month, striking its best level in 9 months. This was well ahead of October’s 0.1% increase and analysts’ expectations of a 0.4% rise and as such helped the Australian dollar gather strength after its recent losses.
The rise in sales is partly down to Black Friday, when consumers are coaxed into spending more in order to benefit from discounts offered by retailers. This means that this level of growth is unlikely to be repeated in the coming months and could distort underlying growth.
The Reserve Bank of Australia are unlikely to pay much attention to the results. Retail sales can be very volatile and one strong month is by no means a new trend. The RBA are in wait and see mode right now and are waiting to gauge the impact of the rate cuts made across 2019 before taking any further action. However, analysts expect the ongoing bush fires to put pressure on the Australian economy, so a rate cut is still looking more likely than any rate hike.
NFP Misses Expectations
The US dollar started the session on the back foot and dropped lower still following the release of the US non-farm payroll data. Only 145,000 jobs were created in December. Analysts had been expecting job creating in the region of 166,000. Wage growth was also tepid, increasing just 2.9% on a yearly basis. Analysts had been expecting growth in the region of 3.1%.
The weaker data is hardly surprising given last months blow out report. These slightly softer readings are unlikely to change the Federal Reserve’s course over monetary policy. Whilst the dollar has weakened on the disappointment, the data isn’t weak enough to cause any grave concerns over the health of the US economy.
|What do these figures mean?|
|When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.
For example, it could be written:
1 USD = 0.6784 AUD
Here, $1 is equivalent to approximately A$0.67. This specifically measures the US dollar’s worth against the Australian dollar. If the Aussie dollar amount increases in this pairing, it’s positive for the US dollar.
Or, if you were looking at it the other way around:
1 AUD = 1.4739 USD
In this example, A$1 is equivalent to approximately $1.47. This measures the Australian dollar’s worth versus the US Dollar. If the US dollar number gets larger, it’s good news for the Aussie dollar.