Aussie Drops Below 1.0500 as Retail Sales Miss

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Australian Retail Sales missed their mark printing at -0.1% versus 0.3% eyed. This was the worst monthly reading since May of 2012 and the second negative month out of the last four. The largest drop in Retail Sales came from household goods which declined by 0.9% followed by clothing which fell by 0.6%. Department stores saw same store sales contract by -0.4%.

Overall the pre-Christmas month of November was a decided disappointment as consumers Down Under retrenched especially on the more durable items while maintaining their spending on restaurants and cafes. The news suggests that growth in Q4 is likely to be lackluster as the Australian economy continues to cool off in response to more temperate demand for basic commodities from China.

The Aussie quickly fell below the 1.0500 mark in response to the news but managed to return back to that level after steading in Asia. Still the pair has found resistance at the 1.0520 mark four times over the past several days and the will likely have a difficult time clearing that hurdle given the disappointing economic data and the renewed possibility of RBA rate cuts s demand in Australian economy is clearly tapering off.

Boris Schlossberg
Managing Director

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