The Dollar has inched higher against developed market currencies following the acquittal of US President Trump in his impeachment trial while Sterling has underperformed.
There has also been little relief for the Euro, with the EUR/USD cross tumbling below 1.10 to a four-month low following the release of weak German data. Factory orders in the Eurozone’s largest economy fell 2.1% mom in December and while this data series is volatile it does not bode well for industrial output and export data
The Australian Dollar however has held its own, with the AUD/USD cross down only marginally to 0.674 at time of writing. Australian retail sales data, released early this morning, at first glance appeared weak with the AUD-value of retail sales contracting 0.5% mom in December. However, this was partly due to consumers bringing forward to November their Christmas purchases and indeed retail sales growth was revised upwards to 1.0% mom in November – the strongest monthly growth rate in two years. Moreover, it would appear that the spread of wildfires in Australia did not decimate
consumer demand in December, as had been feared.
Australian retail sales as a result rebounded 0.5% qoq in Q4 from a 0.1% qoq contraction in Q3 and while wildfires may again impact January figures the underlying picture is one of decent consumer demand. Retail sales could actually rebound in coming months on the assumption that key purchases were only delayed, not cancelled altogether, and that damaged or destroyed houses (and their content) and infrastructure will be rebuilt.
