The Aussie fell to almost three-year lows against the US dollar on Monday, following the release of a downbeat retail sales report from Australia.
AUD/USD slid to its lowest point during todays trade at 0.8847 at 1:30 GMT, after which consolidation followed at 0.8890. Support for the pair was expected at August 31st 2010 low, 0.8859, while resistance was to be encountered at August 2nd high, 0.8969.
The Australian dollar was put under selling pressure on Friday right after the release of Unemployment rate and non-farm payrolls reports from the United States. Earlier today the Australian Bureau of Statistics released data, showing that retail sales in the country remained without change in June, after the revised up 0.2% rise in May. Preliminary estimates pointed a 0.4% increase. Retail Sales, excluding inflation, also remained unchanged during the second quarter of this year compared to the first quarter, while during the preceding period sales registered a 2.0% increase, a revision down from 2.2% previously.
“Retail spending remains one of the weaker parts of the Australian economic story,” Michael Blythe, the chief economist in Sydney at Commonwealth Bank of Australia (CBA) wrote in an e-mailed research note, cited by Bloomberg.
Meanwhile, a possible reduction of the benchmark interest rate at Reserve Bank of Australias (RBA) meeting this week would be the second through the course of this year and continue the easing cycle, which began in November 2011, when the interest rate was reduced from 4.75%. Currently the benchmark rate stands at 2.75%. Traders see a 90% probability that the central bank will cut rates by 0.25% to a new record low level of 2.5% at tomorrows meeting. However, some experts expect that even if the central bank does not consider rate cuts this month, it may be all but assured, that RBA will do so again before the end of the year. The bank is struggling to stimulate growth in other sectors of Australian economy such as retail trade, manufacturing and construction, as the record investment boom in mining begins to fade. Countrys GDP was seen expanding by 2.5% during 2013 by a survey of experts, decelerating from 3.6% gain in 2012.
Elsewhere, the Aussie gained ground against the New Zealand dollar, with AUD/NZD pair rising by 0.47% to trade at 1.1422 at 6:35 GMT. In the mean time, AUD/JPY cross erased 0.48%, trading at 87.58 at 6:36 GMT. EUR/AUD was almost unchanged, dipping a mere 0.04% to trade at 1.4926 at 6:37 GMT.
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