AUD/USD bulls ignore downbeat Aussie Retail Sales to approach 0.6700 amid risk-on mood, RBA’s Ellis eyed

• AUD/USD stays firmer for the second consecutive day, picks up bids after upbeat data.
• Australia Retail Sales grew 0.2% MoM in February, versus 0.4% expected and 1.9% prior.
• Aussie buyers also cheer upbeat comments from Australian diplomat, US Treasury as they amplify banking optimism.
• RBA’s Ellis, US CB Consumer Confidence eyed for intraday directions, Aussie/US inflation clues are the key.

AUD/USD fails to justify softer Australia Retail Sales growth, amid firmer sentiment, as it renews its intraday high near 0.6660 during early Tuesday. In doing so, the risk barometer pair cheers from the broad US Dollar weakness ahead of the key Aussie and US data.

Australia’s seasonally adjusted Retail Sales growth for February came in at 0.2% versus 0.4% market forecasts and 1.9% prior.

Also read: Aussie Retail Sales in line, AUD/USD prints session high

Contrary to the downbeat data, receding fears of banking fallouts allow the AUD/USD pair to remain firmer for the second consecutive day.

Market sentiment initially improved after the US and European policymakers stretched emergency credit lines to the troubled banks and announced deposit insurance schemes. Recently adding strength to the risk-on mood were comments from the central bank officials pushing back the banking crisis concerns and the Silicon Valley Bank (SVB) deal.

That said, Australia’s Assistant Treasurer and Minister for Financial Services Stephen Jones tried to restore the market sentiment in the Aussie banks early Tuesday while speaking on local radio. The policymaker said, “Australia’s banking system is resilient,” while also adding that Australia's financial system is well-equipped to deal with challenges in the global economy.

On the other hand, the latest comments from Federal Reserve Governor Philip Jefferson and the US Dollar’s safe-haven demand could be linked to the AUD/USD pair’s run-up, not to forget downbeat US data. “Inflation ‘has started to come down’ with some of that due to tighter monetary policy and some due to other factors such as improving global supply chains,” said Fed’s Jefferson.  Further, Federal Reserve Vice Chair for Supervision Michael Barr's prepared testimony to Congress also favored the firmer sentiment as it read, “We are prepared to use all of our tools for any size institution as needed to keep the system safe". On the same line were comments from the US Treasury stating that the US will keep using tools to prevent banking contagion as needed.

It should be noted that the US Dallas Fed Manufacturing Business Index dropped to -15.7 in March versus -10.9 expected and -13.5 prior.

Amid these plays, S&P 500 Futures print mild gains while the US Treasury bond yields recover after a three-week downtrend.

Having witnessed the initial reaction to Australia’s Retail Sales, AUD/USD pair traders may wait for comments from Assistant Governor (Economic) at the Reserve Bank of Australia, Luci Ellis for the further run-up. Should the policymaker praises the latest data and push back the dovish concerns, the Aussie pair may have further upside to trace.

On the other hand, the US Conference Board’s (CB) Consumer Confidence for March will join the second-tier housing and activity data to entertain the pair traders. However, major attention will be given to Wednesday’s Monthly Inflation for Australia and Friday’s Fed’s preferred inflation gauge, namely the Core Personal Consumption Expenditure (PCE) Price Index.

Also read: US Consumer Confidence Preview: No good news for Americans

Technical analysis

Despite the latest rebound, a 12-day-old previous support line around 0.6675 restricts the immediate upside of the AUD/USD pair ahead of highlighting the 200-DMA hurdle surrounding 0.6755. Pullback moves, however, remain elusive unless the quote offers a daily closing beyond the 0.6600 round figure.