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Australian Dollar Follows Other Commodity Currencies in Decline, Tries to Rebound

January 11, 2021 at 12:56 by Vladimir Vyun

General Sir John Monash on Australian 100-dollar billThe Australian dollar fell today together with other commodity currencies as investors were more interested in safer currencies, like the US dollar and the Japanese yen (but not the Swiss franc). That suggests that markets were in a risk-off mode, and the decline of European stocks during Monday’s trading session also implied that it was the case. The Aussie was attempting to rebound, getting support from better-than-expected macroeconomic releases in Australia and China.

The Australian Bureau of Statistics reported that retail sales climbed by 7.1% in November on a seasonally adjusted basis. Market participants were expecting the reading to be unchanged from the preliminary estimate of a 7.0% increase. It was a sharp acceleration from October’s 1.4% rate of growth. Experts explained the surge by Black Friday sales and the reopening of the Victoria state after a lockdown. Analysts expect December data to be much worse due to coronavirus-related disruptions.

The Melbourne Institute Inflation Gauge was at 0.5% in December. That was an increase compared with November’s figure of 0.3%.

As for China’s data, the Consumer Price Index rose by 0.2% in December, year-on-year, after falling by 0.5% in November. Analysts were not expecting any change. The Producer Price Index fell by 0.4%. That was a significantly slower rate of decline than 1.5% registered in the previous month and 0.7% predicted by economists.

There are no more notable reports in Australia scheduled for the rest of the week. Next week, employment data is expected to be the most impactful macro indicator.

AUD/USD dropped from 0.7751 to 0.7706 as of 12:55 GMT today. EUR/AUD was up from 1.5730 to 1.5783 but retreated from the session high of 1.5831. AUD/CHF opened at 0.6859, fell to the session low of 0.6833 but rebounded to 0.6867 later. AUD/CAD traded at 0.9849 after opening at 0.9840 and falling to the daily minimum of 0.9813.

If you have any questions, comments, or opinions regarding the Australian Dollar, feel free to post them using the commentary form below.

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