Retail Sales Overview

Early Tuesday, the market sees preliminary readings of Australia's seasonally adjusted Retail Sales for December month at 00:30 GMT. Market consensus suggests a stronger seasonally adjusted MoM print of 1.4% versus -3.9% prior, suggesting a sustained improvement in economic activity.

Given the recently stronger Aussie inflation data and the upbeat comments from the Reserve Bank of Australia's (RBA) officials, not to forget the challenges to sentiment ahead of the month-end consolidation, today’s Aussie Retail Sales appear crucial for the AUD/USD traders.

It should be noted that China’s official NBS Manufacturing PMI and Non-Manufacturing PMI, up for publishing around 01:00 AM GMT on Wednesday, also increases the importance of the Asia-Pacific economic calendar on Tuesday.

Ahead of the data, Westpac said,

An underlying slowdown in retail sales should continue to be evident in January despite recent volatility (Westpac f/c: 1.0%mth, median forecast 1.5%, after December’s shock -3.9%). 

How could it affect AUD/USD?

AUD/USD struggles to defend the week-start recovery while portraying the pre-data anxiety around 0.6740 by the press time. The Aussie pair’s inaction could also be linked to the mixed headlines surrounding China. As the US White House braces for easy China-linked policies for investments, per Politico, while also keeping the Dragon nation on the radar for its alleged role in the Ukraine-Russia tension.

That said, the recent chatters surrounding the Aussie recession, amid fears of comparatively higher rates in Australia than the US, may also seek validation from today’s Aussie Retail Sales data. Hence, recovery in the key statistics may allow the AUD/USD buyers to extend the latest rebound to cross the immediate technical hurdle while a negative surprise, which is more likely, could recall the Aussie pair buyer by highlighting the hawkish Fed concerns.

Technically, AUD/USD rebound remains elusive unless providing a sustained daily close beyond 0.6740 resistance confluence, comprising the 100-DMA and previous support line from late November 2022.

Key Notes

AUD/USD faces barricades around 0.6750 ahead of Australian GDP and US PMI data

AUD/USD Forecast: Australian data will set the next direction

About Australian Retail Sales

The Retail Sales released by the Australian Bureau of Statistics is a survey of goods sold by retailers based on a sampling of retail stores of different types and sizes and it's considered an indicator of the pace of the Australian economy. It shows the performance of the retail sector over the short and mid-term. Positive economic growth anticipates bullish trends for the AUD, while a low reading is seen as negative or bearish.