Mixed day for the AUD ahead of retail sales data

In short

1. The US dollar and Japanese Yen weakened overnight, pushing the AUD/USD and AUD/JPY higher
2. The AUD opens lower against the Pound Sterling and flat against the Euro and NZ dollar
3. Retail sales data out today could have a limited impact on the exchange rate

The Australian dollar opens this morning with mixed performance against the major currencies.

It is up against the US dollar and Japanese Yen, down against the British Pound and flat against the New Zealand dollar and the Euro.

Currency markets seem to be impacted by risk. More specifically, the risks tied to the US/China trade war. Any sign that an agreement is close or coming to a conclusion, markets move into 'risk-on' which helps so-called risker currencies like the Australian dollar. Every time there is a setback to negotiations, the opposite happens.

Last night was no exception.

As details emerged that made a trade deal more likely, the US dollar fell and the Australian dollar to US dollar rate moved higher.

Today on the local market, Australian retail sales figures are released by the Australian Bureau of Statistics (ABS). With the retail sector in a slowdown, expectations are low. It would have to be a really poor number to increase the likelihood of rate cut in February and move the Australian dollar lower. On the other hand, if the data is surprisingly strong, it may lift the AUD but would be limited.