The Australian dollar has posted losses for a second straight day. AUD/USD is currently trading at 0.7567, down 0.24% on the day.
Australia retail sales jump
The week started on the right foot in Australia, as retail sales climbed an impressive 7.0% in November. This crushed the consensus estimate of 2.1% and marked the highest gain since June. The sharp gain was a result of the easing of the lockdown in Victoria, which allowed for a full month of trade. As well, sales from Black Friday also boosted retail sales. The reading reiterates the significant effect that Covid health restrictions are having on economic activity.
The Australian dollar has failed to make any gains on Tuesday, despite the positive retail sales release. Still, the Aussie has been red-hot, recording seven consecutive winning weeks and climbing 8.4% during that time. The Australian dollar has received a boost from rising iron ore prices, which are up more than 50% this year. Iron ore is a key component in steel, and a surge in construction in China has fueled demand and led to higher prices.
Congress reaches stimulus agreement
After months of wrangling between congressional Republicans and Democrats, a massive stimulus package was finally approved on Monday. The USD900 billion package will provide aid to businesses and the unemployed, and is seen as a key tool in boosting the US economy, which has been hit hard by the Covid-19 pandemic. The announcement of the stimulus package on the US dollar has been muted, as the markets priced in a deal being reached. The US dollar has been in broad retreat, and with Joe Biden tweeting on Monday that more stimulus is required in 2021, it’s likely that the US dollar will remain under pressure in the coming weeks.
- AUD/USD faces resistance at 0.7663. Above, there is resistance at 0.7805
- There is support at 0.7539, followed by support at 0.7457
- The pair is putting strong downward pressure on the 10-day MA
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