Reversing on a dime, the AUDUSD currency pair vaulted higher after hitting support at 1.0290 in afternoon trade – currently at 1.0336.  Although the momentum could be attributed to the FOMC decision earlier in the US afternoon, further gains could mount on today’s retail sales release.

For the month of September, retail sales are anticipated to remain positive for the month.  It would be the third consecutive month of positive gains for the sector, and the third out of the last five reports to remain in the black.  For the record, estimates are for the report to climb by 0.5% – slightly lower than the August 0.6% gain.  Quarterly estimates are a bit more optimistic.  For the third quarter, retail sales gains are expected in the 0.6% camp, higher than the 0.3% advance witnessed in the second three months of the year.

The higher number would be widely positive for the Aussie – quelling speculation that the Pacific economy is being hard hit by a recession.  This change in sentiment could curtail current expectations that the Reserve Bank of Australia will cut rates again by another 25 basis points come their December meeting.  Since this week’s reduction in the overnight cash rate, money market yields have been showing speculation of another cut before year end.

Incidentally, the retail sales report could work in tandem with an optimistic services index report scheduled for the session.  Sentiment is rising that the AiG Services Survey may print a third consecutive gain above the 50 minimum level that differentiates growth and contraction in the sector.

Source:  www.forexmarketshot.com