"It's unlikely we'll see a huge reduction or a major reduction in the Aussie dollar's strength until there is a tapering in the US. As the US dollar strengthens, we'll start to see the aussie come off a bit."
- Australia & New Zealand Banking Group Ltd. (ANZ) Chief Executive Officer Michael Smith
The Australian Dollar opened this week significantly higher against its American counterpart, pushing AUD/USD above 0.95, as Australian retail sales surprised market participants to the upside, posting the biggest monthly gain since February. The Australian Bureau of Statistics said sales at Oz retailers ticked up 0.8% monthly in September, after a 0.5% upwardly revised gain a month earlier. Furthermore, September's reading doubled analysts' expectations, while in the three months that led to September, sales advanced 0.7%.
It seems that confidence among Australians is entering a strong uptrend, suggesting increased spending, as consumers are getting less worried about the state of the economy under Tony Abbott. Nevertheless, labour market is still sending worrying signs, as job advertisements slipped 0.1% in October, following a 0.2% uptick in September. The economy is living through a major loss in mining investment and dwindled demand from China, causing a steep decline in job opportunities.
While early signs of improvement are pushing Aussie higher, its strength remains a serious concern for exporters. Furthermore, ANZ Bank CEO Michael Smith sees Australian currency rising even further as long as the U.S. Federal Reserve keeps up its stimulus programme.
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