A$ Holds Gains Post Positive Retail Sales/Current Account Data

AUD/USD is modestly higher post the Q4 GDP partials data releases, and Jan retail sales. The pair spiked to 0.6750, which is through Monday session highs, but we are now back slightly lower at 0.6745. This is up slightly on NY closing levels. Support in the pair remains evident around the 0.6700 region.

• Most focus is likely to rest on the retail sales beat (+1.9%, versus +1.5% forecast). The headline result is payback to the revised -4.0% fall last month, although a sharp downside surprise in nominal retail spending for Jan may have prompted fears of a quicker than expected consumer spending slowdown.
• Other data showed the current account surplus at +A$14.1bn, which was much stronger than expected (+A$5.5bn forecast) in Q4. Q3 was also revised higher. This speaks to underlying resilience for the currency from an external balance standpoint. Net exports (+1.1ppts to GDP) and private sector credit were close to expectations.
• AU-US yield spreads are up a touch, -118bps for the 2yr spread, versus earlier session lows around -121bps.
• In the cross space, the AUD is outperforming at the margins. AUD/NZD is back above 1.0940, with support evident ahead of the 1.0900 level recently.