Global macro overview for 05/10/2017:

The Retail Sales data from Australia has surprised market participants. They expected a 0.3% increase on a monthly basis after a -0.2% drop last month, but the number delivered was at the level of -0.6%. The Retail Sales data are a good gauge for goods sold at retail outlets in the past month and are a leading indicator for the economy. Rising consumer spending fuels economic growth, confirms signals from consumer confidence, and may spark inflationary pressures.

The disappointing decline in sales in Australia has hit hard AUD and shows that the Reserve Bank of Australia will not get arguments to think of a rate hike anytime soon. The market has so far been more optimistic, so the re-evaluation will pull AUD downward.

In a situation where central banks have more and more signals of moving away from ultra-loose monetary policy, the RBA stance may be a ballast for the AUD. The Australian economic growth is still closely tied to the Chinese economy, which is being supported by increased spending on infrastructure and property construction, with the high level of debt continuing to present a medium-term risk. Any sign of problems in China will greatly influence the Australian economy and its currency.

Let's now take a look at AUD/USD technical picture on the H4 tiem frame. The price has tested the Rising Wedge upper line from below and currently, it bounced off it towards the technical resistance at the level of 0.7875 again. So far the momentum is not strong enough to sustain the bounce, but as long as the level of 0.7800 is not violated, the short-term outlook remains bullish.