The Australian dollar failed to take advantage of disappointing US retail sales figures today, giving up most of the gains made earlier on in today’s trading.
At 3.47pm GMT) the Aussie dollar was trading at US76.29c down from US77.00c in yesterdays close.
The local currency jumped as high as US77.08c after the announcement that US retail sales fell 0.6% in February against analysts’ expectations of a 0.3% rise, bringing into question the timing of an interest rate hike as consumers reign in spending.
Brushing off the disappointing numbers was Michael Feroli, JPMorgan Chase & Co.’s New York-based chief U.S. economist who noted that the terrible weather conditions may have played a big part in the poor figures and investors should pay attention to the big picture including the robust labor market,
“It’s not disastrous, There could be some weather effect holding back retail sales. We still have a very good labor market and a lot of other things that are supportive of spending.” He said.
Paul Ashworth an economist from Capital Economics noted that although sales were disappointing it would only be a matter of time before lower gas prices and wage growth would filter into the economy,
“There is no denying that the lack of evidence of a pick-up in consumption growth is disappointing given the boost to purchasing power from lower energy prices,” he said
“But even though we haven't seen it feeding through yet, we do still expect to see that acceleration soon. The biggest driver of real consumption growth is real incomes, and those incomes have been rising at a dramatic pace recently.” He also noted
“It’s just more evidence that there is a negative bias towards the Australian dollar at the moment and we can only expect further losses” noted analysts from Fibogroup forex brokers.
“The US retail sales figure was way off the mark but it still wasn’t enough to keep the Aussie dollar above water so looking to the future it looks pretty grim for the currency”.
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