Disappointing retail sales data for March, off from expected and previous figures sent the Australian dollar immediately lower against its US counterpart. Following weaker commodities prices, the new data dimmed expectations of an RBA rate hike, cutting into demand for the Aussie dollar as a yield currency.
|
EVENT |
ACT |
EXP |
PREV |
|
Retail Sales SA MoM MAR |
-0.5% |
0.5% |
0.8%(R+) |
|
Retail Sales Ex Inflation QoQ 1Q |
0.0% |
0.6% |
-0.4%(R-) |
Weaker sales indicate slowing consumer spending, reducing upward pressure on prices and inflation. Because of the Reserve Bank of Australia’s “wait-and-see” approach with interest rates but also a reiterated position that they will not increase rates in the near term, the Australian dollar dropped against the US dollar immediately after the data release, as investors reduced expectations of an increase of the target cash rate from 4.75%, but also taking the data as an indication of a slowing Australian economy.
Graph generated with FXCM Strategy Trader
The weaker monthly retail sales data was the first decline since October 2010. Although analysts were expecting a fifth straight increase, the stop in the rising trend was most likely the result of an overall slowing Australian economy, supported by lower house prices and inflation expectations reported over the last weeks. Recent data showing a slowing Australian economy, along with a central bank unwilling to increase rates, might contribute to further Australian dollar weakness in the near term.
Table and data generated with Bloomberg L.P.Professional Terminal
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