SYDNEY: The Australian dollar slipped off a one-month top on Friday as subdued retail sales suggested third-quarter economic growth could disappoint, while the New Zealand currency held near five-week highs.
The Australian dollar fell 0.1 percent to $0.7196 after data showed September retail sales rose a mere 0.2 percent, lagging expectations for a 0.3 percent increase.
Adjusted for inflation, sales grew just 0.2 percent for the whole of third quarter, the weakest growth in 1-1/2 years, having slipped from 1.2 percent growth in the prior quarter.
“The data does suggest that the household sector will only make a relatively small contribution to Q3 GDP figures,” Kristina Clifton, senior economist at Commonwealth Bank told Reuters over the phone.
Third-quarter gross domestic product (GDP) data is due to be released in early December.
“Hopefully we will see a stronger (retail) performance next quarter,” she added. “But if we don’t it might suggest that falling housing prices is starting to weigh on consumer spending.”
“We need to see a few more low figures before making that assessment.”
Despite Friday’s losses in the Aussie, the currency is up 1.6 percent on the week so far and is on track for its best weekly showing since Sept.21.
The gains almost entirely came overnight helped by some shortcovering and a strong rally in risk assets globally on signs that a trade war between China and United States could be contained.
That optimism boosted the New Zealand dollar too, which jumped to a fresh five-week high of $0.6667 on Friday.
The kiwi was the top performer among major currencies overnight. For the week, it is up 2 percent so far, its best performance since mid-September.
“Both Antipodean currencies have been stuck in a downtrend with short positions close to extreme levels,” said Rodrigo Catril, senior forex strategist at National Australia Bank.
“They have essentially broken these downtrends and if sustained it will discourage speculators to continue to bet on lower levels.”
Catril sees further upside in the two currencies if risk sentiment remains buoyant.
Market participants now await the U.S. jobs report due at 1230 GMT for possible clues on monetary policy direction in the United States.
New Zealand government bonds eased, sending yields about 2 basis points higher across the curve.
Australian government bond futures slipped, with the three-year bond contract off 2 ticks at 97.70. The 10-year contract edged 0.1 percent down to 97.335.
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Source: Brecorder
