By Lujia Lin, THE TAKEAWAY: Australian retail sales growth unexpectedly accelerates to 0.6 percent > Data comes after weaker service-sector gauge > AUDUSD continues decline on mixed data The Australian Dollar continued to decline versus the USD after retail sales figures and a gauge of Australia’s service sector presented a mixed outlook for the country’s economy. After rallying late on Tuesday on comments from Eurozone officials, the Aussie has pulled back and was testing the 50.00% retracement line at 0.9493 as of 01:15 GMT (taken from the peak of 0.9584 reached earlier). According to the Australian Bureau of Statistics, retail sales growth accelerated to 0.6 percent in August. Expectations had been for a slowdown to 0.2 percent. The figure for July was revised up to 0.6 percent. The acceleration in sales was driven by household goods (up 1.7 percent) and cafes and restaurants (up 1.2 percent). Apparel and department stores detracted from the overall figures, with declines of 0.3 percent and 0.8 percent, respectively. The retail figures paint a different picture from the Australian Industry Group’s Performance of Service Index (PSI), released late on Tuesday. The PSI showed that activity in the service sector decelerated, with the index falling to 50.3 from an August reading of 52.1, driven by weak hiring and wages. The mixed economic data follows the Reserve Bank of Australia’s decision to hold its benchmark cash-rate target at 4.75 percent. While the RBA extended its longest rate pause since 2006, the bank voiced concern about labor-market weakness and cited a more benign inflation outlook, thereby signaling the possibility of future rate cuts. Markets are taking the most recent RBA statement in stride, with overnight index swaps predicting more than 25 bps of rate cuts at the central bank’s next meeting on November 1, according to Credit Suisse data. While the Aussie rallied late on Tuesday in line with other risk-bearing assets – on comments from EU Monetary and Economic Affairs Commissioner Olli Rehn signaling readiness among Eurozone officials to adopt more coordinated action – the increasingly dovish tone at the RBA and mixed economic data could mean continued weakness of the currency.
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.