Another Victim of A Strong AUD
Even though the Australian dollar has seen a mini-rebound over the past 48 hours, there are reasons to remain cautious on the currency on a longer-term horizon.
Earlier this week for example, retail sales in Australia disappointed again. That’s five months in a row now and it supports the RBA’s view that further currency weakness will be needed to rebalance the economy away from its dependence on mining investment as a source of growth.
That’s because there is a blind spot in the data. Making purchases on the internet has become something akin to a national sport in Australia over the past few years. Buying from overseas retailers is especially popular due to the strong Australian dollar, and these overseas transactions are not recorded in the monthly retail sales statistics.
Read the full report: UBS