Forex Market Commentary
The Aussie came under selling pressure on Thursday again, closing at 0.7018(-13 pips) against the greenback. According to the Australian Bureau of Statistics (ABS), sales grew by just 0.1% during the month in seasonally adjusted terms, coming in well under the modest 0.3% increase expected. Adding to the downbeat tone of the report, non-food sales — regarded as a better gauge on discretionary spending patterns — were flat, failing to bounce following a large 1.1% decline in December. That is a worry, suggesting that households are cutting back spending on the little luxuries in life. From a year earlier, total sales increased by 2.6%, the weakest result since May last year. For non-food sales, growth was even worse over the same period, increasing by just 1.7%. Not since October 2017 has annual non-food sales growth been this low. Looking through the monthly data, the ABS said the performance across various categories was “mixed”. Spending on food, at cafes, restaurant and takeaway outlets and “other” retailers grew by 0.3%, 0.3% and 0.7% respectively, offsetting falls of 2.1% and 0.3% respectively at department stores and at clothing, footwear and personal accessory retailers. Sales of household goods were flat, likely reflecting the downturn in Australia’s housing market and multi-decade lows in housing turnover. Turning to the day ahead, all attention today will be offshore with no major Australian economic data releases of note. In Asia, the main event will come from China with the release of trade data for February midway through the session. A trade surplus of $US26.4 billion is expected. It’s also worthwhile reminding at this point that the timing of Lunar New Year celebrations in China often creates unusual movements in Chinese data at this time of the year.