- Australian Dollar (AUD) extends gains for 4th session
- Australian unemployment data to show rate at 7.8%
- US retail sales rise more slowly than forecast
- FOMC rate decision up next
The Australian Dollar US Dollar (AUD/USD) exchange rate is trading higher for a fourth straight session today. The pair settled +0.2% at US$0.7300. At 15:30 UTC, AUD/USD trades +0.5% at US$0.7340.
The Australian Dollar is pushing higher amid a broad upbeat mood in the market despite slowing US retail sales. Retail sales in the US increased by 0.6% in August compared to the previous month. This was down from a 1.2% increase in July. Analysts had been expecting sales to rise 1% on a monthly basis in August.
Core retail sales, which correspond mostly closely to the consumer spending component of the GDP reading also declined -0.1% after rising by 0.9% in July.
The data shows that consumer spending slowed in the previous month, the same month that the additional unemployment benefits were cut for millions of Americans. The figures also add into the idea that the economic recovery in the US is slowing.
Attention will now turn to the US Federal Reserve interest rate decision. Market participants are not expecting the Fed to move on monetary policy. This means that the focus will be on the updated economic projections, particularly for growth and inflation. Investors will also look closely at the dot plot, which maps the Fed’s expectations for interest rates. The dot plot could be lowered to reflect the change in Fed policy to allow inflation to overshoot the 2% target for extended periods of time to make up for the long periods that it is below 2%. This could drag on demand for the US Dollar.
Australian Dollar investors will look ahead to the release of labour market data. Analysts expect the unemployment rate to tick higher to 7.8%, up from 7.5%. Unemployment in Australia is expected to climb over the coming months to 10% by the end of the year.