The Australian dollar traded slightly lower Tuesday, undermined by the domestic and Chinese data, with bulls being unable to push the AUD/USD pair above the selling zone at 0.68.
Earlier, Australia’s Q1 retail sales dropped 0.6% compared to predictions of 0.4% and previous readings of 0.2%, whereas May’s Westpac Consumer Confidence fell to -1.7% from 9.4%, both of which weighed on the AUD/USD exchange rate.
Additionally, unveiling Australia’s budget will keep the Australian Dollar active. Despite a predicted $78 billion deficit, Australian Treasurer Jim Chalmers has already disclosed that the budget ended in balance in 2022-23. Bloomberg said Chalmers laid the groundwork for the unexpected surplus by citing a surge in revenue due to rising commodity prices, falling unemployment, and faster-than-anticipated real wage growth.
Chinese data disappointed investors
Meanwhile, China’s trade surplus grew more than projected in US dollar terms, as imports fell sharply during the reporting period.
The trade surplus was $90.21 billion, more than the forecasted $71.6 billion and the revised $88.19 billion. Year-over-year exports were 8.5% versus. 8.0% expected and 14.8% before. At the same time, year-over-year imports (YoY )reached -7.9%, compared to a 0% prediction and -1.4% previously. This suggests a sluggish recovery from the world’s second-largest economy, despite removing COVID restrictions.
On Tuesday, Pierre-Olivier Gourinchas, chief economist at the International Monetary Fund (IMF), stated that they are a bit concerned about recent banking sector turbulence while also adding that so far, authorities have been able to react quickly to banking sector turbulence. Still, we are not at the end of the story.
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It was widely predicted that the Federal Reserve of the United States would raise interest rates again last week, and they did so. However, it also signaled that it would delay further tightening at its next June meeting, emphasizing that its decisions would be data-driven.
US debt ceiling talks will continue
On Tuesday, Republican House Speaker Kevin McCarthy, Republican Senate Minority Leader Mitch McConnell, and senior congressional Democrats will meet with US Vice President Joe Biden at the White House. Reuters reports that two people familiar with the matter said on Monday that US Treasury Secretary Janet Yellen would personally reach out to corporate and financial executives prior to the conference to discuss the “catastrophic” impact a US default on its debt would have on the US and the world’s economies.
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The Australian dollar has retested the critical resistance of previous highs at 0.68 yet again, unsuccessfully. However, if the Aussie jumps above that level, it could be a powerful bullish signal, likely starting a new uptrend, targeting the 0.70 level.
AUD/USD daily chart, source: author´s analysis, tradingview.com
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