AUD rallies on firm data

Australian retail sales rose 0.5% in December in line with expectations although the ex inflation quarterly increase was lower than forecast at 0.9%. However, there was a revision higher to the previous quarter. The bigger news is that the December trade balance came in much better than expected, recording a surplus of AUD 468 million compared to a deficit of AUD 200 million expected. Business confidence also came in strong rising to 8 in Q4 from an upwardly revised reading of 5 in Q3. The data bodes well for AUD, with the currency set to find further support in the short term. If anything, it also helps to validate the RBA’s message that the easing cycle is over. A break above AUD/USD 0.90 is now on the cards.

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