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Aussie Pressured as Retail Sales Miss Their Mark

Last updated 11/30/2011 8:10 PM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

Australian Retail Sales missed their mark for the second month in a row printing at 0.2% versus 0.4% eyed in a sign that consumers Down Under are turning decidedly cautious  as sentiment continues to weaken. Growing concerns over the slowdown in economic growth in Asia Pacific region as well as dwindling labor market demand have clearly dampened consumer appetite as sales declined for the third month in row.

In addition to weaker than expected numbers on the consumer front, the data  for Building Approvals proved to be major disappointment as well with demand tumbling by -10.7% versus forecasts of 3.5% rise.  Overall the news points to a considerable cooling in the Australian economy and suggests that the RBA is likely to reduce its benchmark by at least another 25bp to 4.25% in the near future.

The news sent Aussie lower as the pair dropped towards the 1.0200 figure after ending the North American session at 1.0285. Today’s massive rally in the pair caused by the coordinated liquidity actions from the top G10 central banks may see some additional profit taking if the economic  news from Asia continues to disappoint. The Chinese Official Manufacturing PMI reading has also surprised slightly to the downside printing at 49.0 versus 49.8 projected and the market will now await the HSBC reading due at 1:30 GMT.

For the time being the AUD/USD has held support at the 1.0200 level as risk flows remain positive, but the pair could be vulnerable to further selloffs as deteriorating fundamentals exacerbate any risk aversion decline.

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.