THE Australian dollar closed lower today after a fall in monthly retail sales figures surprised financial markets.
At 5pm eastern daylight time, the Australian dollar was trading at $US0.8813/15, down 0.67 per cent from Wednesday's close of $US0.8871/74.
From 7am AEDT, the local unit had traded between $US0.8786 and $US0.8830.
RBC Capital Markets senior currency strategist, Sue Trinh, said the Australian dollar was weaker as financial markets focussed on weaker-than-expected retail sales data.
Retail sales fell 0.7 per cent in December, below market forecasts of a 0.2 per cent rise, the Australian Bureau of Statistics said today.
Also, the ABS said building approvals rose by 2.2 per cent in December, which was above market forecasts of a flat result.
"We had a stronger headline for building approvals mitigating somewhat the weaker monthly number for retail sales," Ms Trinh said from Hong Kong.
"All up, the Aussie has struggled to regain the levels before the domestic data came out, although it recovered reasonably well from the post-data lows.
Financial markets were still adjusting to the Reserve Bank of Australia's (RBA) decision to leave the cash rate unchanged at 3.75 per cent following its board meeting on Tuesday, Ms Trinh said.
Most economist had expected the central bank to lift the cash rate a quarter of a percentage point to four per cent.
"Ultimately the RBA is in data-watch mode," she said.
"We need to see a continuous stream of good data to justify the 90 basis points worth of rate hikes still built in for this year."
In the upcoming Thursday offshore session, the US Department of Commerce is due to release factory orders data for December.
Also, the US Department of Labor is scheduled to release initial jobless claims for the week ending January 30.
Ms Trinh said financial markets were in wind-down mode ahead of the release of US non-farm payrolls report for January on Friday night (AEDT).
"That is pretty typical for a week with payrolls number out," she said.
She forecasts the Australian dollar to trade between $US0.8770 and $US0.8850 during today's offshore session.
Meanwhile the Australian share market closed lower today, with retail stocks among the hardest hit after the release of weak retail sales data and a disappointing result from Myer.
At 4.15pm eastern daylight time, the benchmark S&P/ASX200 index was down 26.3 points, or 0.57 per cent, at 4,621.6, while the broader All Ordinaries index had fallen 29.1 points, or 0.62 per cent, to 4,644.1.
On the Sydney Futures Exchange, the March share price index contract was 19 points lower at 4,588, on volume of 24,433 contracts.
The market slipped about 0.3 per cent at the open and extended losses throughout the day, with the retail sector underperforming the broader market.
Myer said before the start of trading that its sales had been "negative" in December and up only 1.2 per cent on a like-for-like basis for the first half of fiscal 2010.
"The period leading up to Christmas 2009 was characterised by earlier and deeper discounting in the retail sector than has been evident for many years," Myer said in a statement.
Its shares ended down 13 cents, or 3.85 per cent, at $3.25, well below the $4.10 debut price when it listed in November last year.
Data from the Australian Bureau of Statistics showed retail trade fell 0.7 per cent in December, well below market expectations of an 0.2 per cent rise.
Shaw Stockbroking senior dealer Jamie Spiteri said the Myer result was greeted negatively by the market and showed the Reserve Bank of Australia (RBA) was correct to leave interest rates unchanged at Tuesday's monthly board meeting.
"They are aware of parts of our economy which were previously showing resilience are actually starting to moderate," Mr Spiteri said.
"It just shows that consumer spending is moderating."
Other retailers also ended lower.
Department store David Jones backpedalled 20 cents, or 4.06 per cent, to $4.73, Harvey Norman slipped six cents, or 1.59 per cent, to $3.72 and JB Hi-Fi was down 78 cents, or 3.7 per cent, to $20.28.
