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Australian Retail Sales just lower than expected

Written by Sam Coxhead on February 7th, 2011.      0 comments

12:15 PM (AEST) Australian Retail Sales for the month of December grew just .2% , which was less that the expected .5%. The AUD/USD sold off initially from 1.0130 to 1.0115 but has since recovered. Retail Sales are notoriously volatile and the fortunes of the Australian dollar are not particularly aligned with the domestic economy at present.

The record prices for commodities such as copper are being touted as the main drivers for the bouyant AUD at present. The main debate centers on where the large investing interest in the hard commodities is coming from. Are we looking at another bubble potentially going to burst?? or is enough of the buying interest being driven by demand from the rapidly developing economies of China and India?? There is no clear cut answer given the make up of the market, and the huge participation of Exchange Traded Funds (ETFs). ETF's are proving to be massively popular in Asia and most are required to hold atleast 50% worth of their value in the pyhsical commodity.

Strong resistance in the AUD/USD remains in place at the 1.0200 level and obviously again at the all time post float highs of 1.0257.