Australian dollar up on retail sales data

Story link: Australian dollar up on retail sales data

With new figures showing that retail sales in Australia were up by 1.1 percent in March, twice the amount expected by analysts, the Australian dollar added 0.5 percent versus the US dollar to $0.8285. The new figures prompted renewed speculation that the Reserve Bank of Australia might raise interest rates again soon. Also helping out the currency there was the new Australian federal budget, released Tuesday and calling for tax cuts and more spending.

The euro, however, weakened after March’s German industrial production data was weaker than had been expected. The shared currency dropped 0.4 percent to £0.6796 against sterling, while it was 0.5 percent lower to $1.3530 in relation to the US dollar and fell 0.6 percent to ¥162.15 versus the yen. The European Central Bank is expected to keep interest rates on hold when it meets Thursday, but most analysts expect a rate hike in June.

The US dollar was also weaker. Aside from its decline versus the Australian dollar, it fell 0.1 percent against both the yen and sterling, to ¥119.20 and $1.9910 respectively. The Federal Reserve is likely to keep interest rates at 5.25 percent on Wednesday.

In addition to the ECB rate decision, the Bank of England’s Monetary Policy Committee is also scheduled to meet Thursday. Most analysts expect the MPC to raise interest rates in the UK by 25 basis points, but some believe that inflation data due Tuesday but already available to the Bank could prompt a 50 basis point rate hike there.