The Australian dollar is experiencing downward pressure at the start of the trading week, hurt by a combination of factors. First , Australian retail sale sales data came in weaker than expected today , adding to the case for the Reserve Bank of Australia (RBA) to lower interest rates tomorrow.
A report released by Australia’s Bureau of Statistics showed that retail sales fell 0.1 percent in December from a previous month’s 1.0 percent gain. The data were sharply lower than estimates for a 0.2 percent gain, and recorded the first drop in six months
The aussie dollar retreated from Friday’s six-month high in reaction to the data as concerns are that the economy is still showing sign of weakness and could add to the case for a cut in interest rates tomorrow. The Reserve Bank of Australia is due to announce interest rates tomorrow, and is expected to lower its cash rate to 4 percent from 4.25 percent as inflation appears to be easing.
Meanwhile, uncertainty over the Greek dent talks is also pressuring the Australian dollar, which is sensitive to risk appetite. Greek policy makers area continuing discussions with international creditors today and are aiming to reach an agreement that will result in Greece receiving a much needed second bailout to prevent a default. Greece requires funds before March 20 when it has to pay bond redemptions to Greek debt holders.
AUDUSD eased off a six-month high of 1.0793 and is currently trading at 1.0695 in early European session trading.