AUD/USD managed to bounce off fresh three-month lows despite weak retail sales data. The pair extended losses to the lows near 0.7020, where it seems to have found some bids and turned positive on the day. On the upside, the recovery is limited by the 0.7050 area.
The Australian retail sales recovered just by 0.1% in January versus +0.3% expected, after a decline by 0.4% in the previous month. The report added to a growing list of concerns over the strength of household spending. Meanwhile, the trade balance registered a thirteenth straight surplus. January’s trade balance was AUD4.55 billion, well above the 2.75 billion expected. The release helped the Aussie to balance out the negative impact from retail sales data.
The next key event for AUD/USD is tomorrow’s U.S. labor market data. The dollar seems to be losing the upside momentum after the earlier rally but the potentially strong figures could make USD demand reemerge. In this scenario, the pair could resume the decline and challenge the mentioned support, targeting the 0.70 figure.