Greenback smashed on retail sales

A weaker USD was the dominant theme in in the FX space with a weaker April retail sales reading not helping sentiment.

Source: Bloomberg

The sell-off in treasuries also continued with the 10-year finishing the session up 3.5 basis points. AUD/USD rallied to $0.8124 and this will provide fresh headaches for the RBA.

The momentum from the budget also seems to be continuing for the AUD and not even a poor showing from China data yesterday was enough to deter the currency. This has left the pair trading at its highest since January – the period before the RBA’s first rate cut.

Clearly all the hard work has been swiftly undone. The high in January was $0.8295 and that’ll be a potential target for traders. A downtrend that’s been in place since September last year has also been broken and this has been complimented by a close above the psychological $0.8000 barrier.

There is also a nice uptrend from April lows and that’s supporting the price action. Stops would no doubt also have been triggered upon the move above $0.8000 and this could see the pair squeeze even higher.

Click to enlarge

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.