AUD to USD Forecast: Aussie Retail Sales and the RBA Interest Rate Path

Aussie Retail Sales Could Give the RBA More Certainty

On Thursday, Australian retail sales figures will influence the buyer appetite for the AUD/USD. A larger-than-expected rise in retail sales could reignite speculation about an RBA interest rate hike.

Economists forecast retail sales to increase by 0.4% in February. In January, retail sales jumped by 1.1%.

Upward trends in consumer spending could fuel demand-driven inflationary pressures. A more hawkish RBA rate path could raise borrowing costs and reduce disposable income. Downward trends in disposable income could force consumers to curb spending, dampening demand-driven inflation.

The retail sales figures are significant following softer-than-expected inflation numbers from Wednesday. In February, the CPI Monthly Indicator remained unchanged at 3.4%. Economists expected an inflation rate of 3.5%.

In March, the RBA highlighted uncertainty about household spending. Household spending trends could influence the inflation outlook and the RBA rate path.

US Economic Calendar: GDP, Jobless Claims, and Consumer Sentiment

On Thursday, the US economy will be in the spotlight. Finalized Q4 GDP numbers, jobless claims, and finalized Michigan Consumer Sentiment figures warrant investor attention.

The jobless claims and consumer sentiment figures will likely have more impact. Tight labor market conditions could support wage growth and consumer spending. Consumer spending may fuel demand-driven inflation and impact bets on an H1 2024 Fed rate cut.

Significantly, tight labor market conditions also influence consumer sentiment. A positive consumer sentiment environment could drive consumer spending.

Economists forecast initial jobless claims to increase from 210k to 215k in the week ending March 23. According to preliminary numbers, the Michigan Consumer Sentiment Index slipped from 76.9 to 76.5 in March.

Other stats include Chicago PMI and pending home sales data. However, barring sizeable deviations from forecasts, these will likely play second fiddle to the jobless claims and sentiment numbers.

Beyond the numbers, investors must consider FOMC member speeches. Recent Fed speeches created uncertainty about the timing of a Fed interest rate cut.

Short-Term Forecast

Near-term AUD/USD trends will hinge on Australian retail sales and US inflation figures. Soft Aussie retail sales figures could end bets on an RBA rate hike. Conversely, hotter-than-expected US inflation numbers could impact the number of Fed rate cuts in 2024. The net effect could be an AUD/USD drop below the $0.64500 handle.

AUD/USD Price Action

Daily Chart

The AUD/USD remained below the 50-day and 200-day EMAs, confirming the bearish price trends.

An Aussie dollar return to the $0.65500 handle would give the bulls a run at the 50-day EMA. A breakout from the 50-day EMA could bring the $0.65760 resistance level and the 200-day EMA into play.

Aussie retail sales and the US economic calendar need consideration.

Conversely, an AUD/USD drop below the $0.65 handle could give the bears a run at the $0.64582 support level.

With a 14-period Daily RSI reading of 44.36, the AUD/USD could fall through the $0.64582 support level before entering oversold territory.