- Australian Dollar (AUD) advances for fifth straight session
- Australian retail sales and strong Chinese service sector data boost hopes of a speedy economic recovery
- US Dollar (USD) sees quiet session owing to US public holiday
- Australian Dollar US Dollar exchange rate (AUD/USD) targets US$1.6950
At 14:00 UTC, Australian Dollar US Dollar exchange rate is trading 0.2% higher at US$1.6942. The pair is on track to gain 1% across the week, in its second straight week of gains as recovering global economic data keeps nagging coronavirus fears at bay.
Australian retail sales saw a record surge in May as the country gradually started easing lock down measures. Entire sectors of the economy were able to reopen enabling a recovery from April’s record decline in sales.
Retail sales jumped 16.9% in May, after dropping -17.7% in April. The solid bounce back points to consumer spending not being as weak as initially feared in the second quarter, raising the prospect of a less severe downturn.
Adding to the buoyant mood, data also revealed that China’s service sector grew at its fastest pace in over a decade in June. The Caixin/Markit PMI rose to 58.4, up from 55 as it continued to pick up from its February nadir. China is Australia’s largest trading partner. The Aussie dollar is often referred to as a China proxy. The Aussie Dollar advanced following the upbeat data and optimism that the Chinese economy is recovering faster than initially expected.
These data points came following yesterday’s spectacular US non-farm payroll report, which revealed that 4.8 million jobs were created in the US in June.
The strong global data raised hopes of a rapid economic rebound increasing risk appetite. As risk sentiment rises so does demand for riskier currencies like the Australian Dollar, whilst the safe haven US Dollar moves out of favour.
Today is a public holiday in the US in observance of Independence Day. US markets are closed so movement in the US Dollar is expected to be limited heading into the weekend. Looking ahead investors will keep a close eye on coronavirus cases in the US as cases spiral out of control.