Intraday Market Thoughts

US Retail Sales Strong, Aussie Budget Upcoming

by Adam Button
May 14, 2013 0:20

Upbeat US retail sales numbers led to more speculation about Fed tapering Monday. The US dollar was the best performer while the Aussie lagged. The focus will remain on the Australian dollar today as the government delivers its latest budget. Both Premium longs in EURAUD are nearing their target. USDCAD also awaits as seen in the latest Premium Insights.

Economists hiked Q2 growth forecasts after US retail sales excluding autos and gas rose 0.6% compared to 0.3% expected. The March figure was also revised slightly higher to flat from -0.1%.
The US dollar jumped 40-50 pips immediately after the release on a number of crosses but it was unable to maintain the momentum. USD/JPY touched 102.05 but was unable to break the Asian high of 1.0215. A later rally struck out ahead of 102.00, suggesting that upside USD/JPY momentum could be fading in the immediate term.
The Australian dollar continued lower despite a neutral tone on risk appetite. AUD/USD fell to a 10-month low below 0.9950 as the breakout from the 9-month range continues.
The main focus of the upcoming session will be Australia as the government releases its budget at 0930 GMT. The government is expected to forecast slower economic growth and lower corporate tax receipts. Private sector economists are increasingly flagging softness in investment and the government could do the same. Expect the Gillard government to promise a surplus by 2016-17.
The Australian dollar will be vulnerable to a downtrodden tone or warnings about falling investment but it's far more likely that the government will emphasize economic strength and that could boost AUD back to parity.
The other economic event on the calendar is earlier at 2350 GMT when Japan releases the April corporate goods price index. The consensus is for a 0.2% y/y drop. Also keep an eye out for the 0345 GMT release of the 30-year JGB auction results.
Finally, those looking for clues on the strength of the global economy can eye the Indonesian interest rate decision at approximately 0630 GMT.

Act Exp Prev GMT
Retail Sales (APR)
0.1% -0.3% -0.5% May 13 12:30
Retail Sales (ex. Autos) (APR)
-0.1% -0.2% -0.4% May 13 12:30

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