ET:Australian, New Zealand dollar hit by soft data, China worries
WELLINGTON/SYDNEY: The Australian dollars fell to six-week lows on Monday after a disappointing reading on domestic retail sales added to worries about a slowing Chinese economy and narrowed odds for another cut in interest rates.
The Aussie slipped 0.5 percent on the day to $1.0268 , having briefly touched a low as $1.0239, its weakest since late July, after a raft of disappointing data.
The Reserve Bank of Australia (RBA) holds its September policy meeting on Tuesday and economists still expect rates to remain on hold at 3.5 percent for a third straight month. Bank officials have sounded content to wait for cuts made in May and June to make themselves fully felt.
But interbank futures have narrowed the odds of a cut further out, giving a 2-in-3 chance of a move in October and are fully priced for a cut to 3.25 percent in November.
Investors are wagering the central bank will have to ease again largely to offset the drag on global growth from Europe and, increasingly, China.
"Today's data provides a worrying sign that retail spending growth has taken a backward step," wrote economists at St George Bank.
"Although we expect the RBA to sit pat when it meets tomorrow, ongoing softness in retail spending along with the continued concerns about the global economy supports the view that there is another rate cut on the cards," they added, forecasting a move in November.
Australian retail sales suffered a surprising spill in July, falling 0.8 percent, while job advertisements slipped 2.3 percent in August.
Other figures out on Monday showed softness in company profits last quarter, while business inventories were a drag on economic growth.
The Antipodean currencies were already under pressure after China's official PMI released on Saturday dipped below 50 for the first time since Nov 2011. That was the latest sign that the world's second-biggest economy is struggling against global headwinds.
Both Aussie and kiwi dollars are sensitive to news out of China, the single biggest export market for Australia and second-biggest for NZ.
But hopes the U.S. Federal Reserve and the European Central Bank would soon add more stimulus to revive their respective economies seemed, so far, to have helped cap losses.
Support for the Aussie was seen at $1.0220, the 38.2 percent of the June-August climb, ahead of $1.0205, the 100-day moving average. Resistance was found near $1.0300.
