Australian retail sales outperform
Australian retail sales posted a 1.8% gain for a third straight month. The February release beat the consensus estimate of 1.0% and is a further indication that the economic recovery continues.
The Australian dollar has sparkled in March, gaining 3.20%. The risk-sensitive currency is flying high despite plenty of risk apprehension in the markets. The Russia-Ukraine war has resulted in millions of refugees in the middle of Europe and relations between Russia and the West haven’t been this frosty in decades.
In China, the government continues to resort to extreme measures in order to contain an upsurge in Covid cases. The government has imposed rolling lockdowns on Shanghai, which has a population of some 25 million. The property crisis has faded from the headlines, but it hasn’t gone away. Since Evergrande’s default last year, Chinese property developers are finding themselves locked out of the global debt market, and the country’s third-largest developer missed two bond payments last week.
In this turbulent environment, the driver behind the Australian dollar’s impressive performance has been the resource-based economy, as the range of commodities that Australia exports has been in huge demand as prices continue to head higher. Despite friction with China, Australia’s largest trading partner, the export sector is booming.
The Morrison government released its annual budget earlier today, and as expected, the response from the Australian dollar was a yawn. With the government trailing in the polls and an election expected in May, the budget had some goodies for voters, such as tax cuts and a temporary reduction in the fuel tax. With inflation on the rise, the government as well as the RBA are under pressure to relieve the surging cost of living.
- 0.7414 is the first line of support. Below, there is support at 0.7313
- There is resistance at 0.7577 and 0.7639
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