- AUD / USD holds gains after China’s standstill rate decision.
- Australia’s retail sales fell 17.9% in April, the largest drop ever.
- The Australian dollar remains high, however, with the RBA skipping bond purchases.
AUD / USD is a better offer above 0.6550 at the time of publication and seeks to overcome the resistance of the trend line falling from the April 30 and May 11 highs.
The People’s Bank of China (PBOC) kept the prime rate for one- and five-year loans unchanged at 3.85% and 4.65%, respectively. The status quo decision was expected and has little impact on the sensitive Australian dollar to China.
In addition to the PBOC pricing decision, Australia reported a 17.9% monthly decline in retail sales in April. This was the largest seasonally adjusted decline ever recorded. So far, however, the Australian dollar has ignored the dismal data.
The pair is currently trading at session highs close to 0.6650, which represents a gain of 0.40% on the day. The spot has added nearly 10 pips since the PBOC rate decision and the release of preliminary Australian retail sales figures.
The Australian dollar is pulling offers, likely due to the Reserve Bank of Australia (RBA) decision to skip purchases of government bonds. The central bank has not purchased bonds as part of its quantitative easing program since May 6. This makes the RBA relatively hawkish compared to its global counterparts.
The AUD could therefore continue to gain altitude in the coming day. The ascent could stop and the currency could face some selling pressure if the sense of risk weakens. This possibility cannot be excluded, as scientists have raised questions regarding the authenticity of Moderna’s positive test for the coronavirus vaccine. At the time of publication, futures on the S&P 500 are up 0.54%.