Past week, Australian retail sales came in below estimate at 0.3% versus 0.5% market estimates but higher than last month when retail sales came in flat. Also, last month’s data was revised lower to -0.1% versus 0%.
This week, the Reserve Bank of Australia (RBA) Board meets in order to decide if it is going to lower the interest rate target from the current record-low at 2%. Adding we are also waiting for unemployment rate which had slightly decreased last month from 6.2% to 6.1%.
Last week, the Bureau of Labor Statistics released its job market report for the month of June, showing that 221K jobs were added and the unemployment rate fell to 5.3%, there seemed to be steady growth in the US economy.
The AUDUSD fell 6.99% since the start of the Year and is in bearish phase. The currency tried to rally last week but found enough resistance at 0.7734 to turn around and gave all its gains back closing near the low of the week, breaching below year lows. The Stochastic is showing an oversold market but even with the currency well into oversold territory, we should not fight the strong downward trend.
Expecting a downward move to a weekly Fibonacci extension at 0.7400 on a break below previous week low at 0.75035 (scenario 1) and a retrace back to the weekly support at 0.7533 on a bounce off the weekly Fibonacci extension at 0.7400 (scenario 2).