- AUD/USD continues to trade in green after below-forecast Aussie data.
- Trade surplus narrowed in December, as imports rose.
- Retail Sales dropped more than expected in December.
- Aussie remains bid on speculation that RBA may keep rates on hold for a longer time.
The Australian dollar continues to trade in the positive territory despite the weaker-than-expected Aussie data release.
Australia’s Trade Balance dipped to A$ 5,223 million, driven by a 2% rise in imports and a 1% rise in exports. Markets had penciled in a trade surplus of A$ 5,950 million following December’s A$ 5,800 million figure.
Meanwhile, consumption, as represented by Retail Sales, fell 0.5% in December, compared to an estimated drop of 0.2% following November’s 0.9% rise.
The slowdown in spending and the decline in the trade surplus has so far, failed to weaken the Aussie dollar, leaving the AUD/USD pair in positive territory above 0.6750 – a level where it was trading ahead of key data releases.
Aussie’s resilience could be associated with the growing talk that the Reserve Bank of Australia needs more time and evidence to be convinced that coronavirus and bushfires are causing a deeper economic slowdown and may keep rates on hold for a longer period of time.
While most investment banks are still expecting the RBA to cut rates in the second quarter, Goldman Sachs thinks the central bank may remain on hold throughout 2020, unless there is a marked deterioration in the labor market.
The bid tone around the AUD will likely strengthen if other investment banks also push back rate cut calls.