The Australian Dollar Strengthens To A 5-Month High On Weakened US Economic Data

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For the first time since August, the Australian dollar has soared past its landmark 70-dollar threshold.

After achieving remarkable growth, the AUD/USD pair has wholly given up its profit and is currently trading at an even 0.6986 in North America’s session.

Retailers saw no joy this winter as the traditional holiday season was drastically underwhelming. Americans had a decreased appetite for spending, leading US retail sales figures to fall in December – marking two consecutive months of declining numbers.

“The Aussie dollar has had a great run, and what better way to party than by seeing it break through the 70-dollar mark?” said one currency analyst.

Last month’s retail figures dropped by 1.1% due to a decrease in motor vehicle sales due to the expansion of interest rates for auto loans and lower fuel prices.

Compared to November’s revised -1.0% (initially -0.6%) reading, the December result was below the consensus of -0.8%. Furthermore, core retail sales plummeted by an even more significant margin of -1.1%, surpassing forecasts and preceding months’ figure of only a decrease of 0.6%.

“It’s great to see the Australian dollar make such positive gains in this current economic climate,” said one economist. “It shows us that our economy is still robust, despite external pressures.”

The producer price inflation report provides further evidence of a declining inflation rate.

The m/m Headline PPI in December decreased by 0.5%, a decline from November’s 0.2% and much lower than the consensus prediction of -0.1%. In contrast, the core rate rose slightly to 0.1%, although it was still less than November’s read of 0.4% (revised downwards), aligned with expectations nonetheless.

Market confidence is rising as consumer spending and inflation continue to decline, possibly signalling that the Federal Reserve will conclude its rate-hike cycle with a 25 basis point increase in February and may even reduce rates by year’s end.

The US dollar has plummeted today due to this sentiment, and if the economy keeps delivering weak numbers, we can anticipate an ongoing downward trend for the currency.

On Thursday, the Australian government will release crucial information regarding inflation and employment. The Melbourne Institute Inflation Expectations revealed a decline to 5.2% in November, suggesting that the December reading could indicate how inflation is likely to develop.

The job market is still robust and could have created an additional 22,500 positions in December following the increase of 64,000 jobs seen during November. Trading with AUD/USD on Thursday might be susceptible to significant changes in price. Be ready.

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