The Takeaway: Australian Retail Sales in December and fourth quarter came in well below expectations -> Further easing polices by RBA is possible -> AUD/USD dropped
The Australian dollar sold broadly against its major counterparts as retailers sold fewer goods in December, missing analysts' expectations.The Australian Retail Sales excluding inflation posted a 0.1% increase (QoQ) in the fourth quarter of 2012, compared with a revised -0.3% decrease (QoQ) in the third quarter. The figure missed expectation set for 0.3%. Meanwhile, the seasonally adjusted retail sales posted a -0.2% decrease (MoM) in December, compared with a revised -0.2% decrease (MoM) in November, also came in well below expectation set for 0.3%.
The worse-than expected retail sales depict a mixed economic outlook for Australia when combined with the encouraging trade report released yesterday. The figures suggest that consumer confidence was weak in December and consumers were reluctant to spend. According to the latest RBA’s monetary policy decision, government officials hinted that further easing policy to support demand is possible. Forex traders may be focused on the employment report scheduled for release tomorrow at 00:30GMT, which may provide further guidance on interest rate expectations.The market is pricing in a 54% probabilty that the RBA will cut their 3% interest rate by 25 bps in their next meeting on march 5.
The AUD/USD dropped by 25 pips upon the announcement. At the time of writing, the currency pair is trading at 1.03650.
AUD/USD 5 Minute Chart
Charts Created by Robin Leung using Marketscope 2.0