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With not a lot of major data on the docket, Asian session traders focused on selling the Aussie after Australia’s retail sales came in weak.

  • China’s banks still closed for the week-long holiday
  • Australia’s retail sales shows 0.6% decline vs. 0.2% dip in July
  • Australia’s trade balance shows 0.99B AUD surplus vs. 0.85B expected, 0.81B previous
  • Major currencies stay on tight ranges ahead of bigger reports scheduled

Major Events/Reports:

Australia’s retail sales miss

The biggest story of the hour is the Land Down Under printing a weaker-than-expected retail sales report.

See, analysts were expecting a gain of 0.3% in August after last month’s 0.0% reading. Instead, retailers saw a drop of 0.6%. That’s the fastest drop since March 2013, yo! What’s more, July’s growth was also revised lower to reflect a 0.2% decline!

A closer look tells us that sales dipped for most categories. Food retailing (-0.6%), restaurants and takeaway food (-1.3%), household goods retailing (-1.0%), and clothing, footwear and personal accessories (-0.2%) saw declines while retailing (1.0%) and cafes, department stores (0.7%) saw gains.

The report came at the heels of the RBA warning against the impact of higher household debt and stagnant wages, so it got a bit too uncomfortable for the Aussie bulls.

Australia posts stronger trade surplus

Balancing (heh) the bad vibes from the weak retail sales report is the trade balance release, which showed that the Land Down Under had a 0.99B AUD trade surplus in August.

The number is higher than July’s 0.81B AUD surplus as well as the 0.88B AUD figure that market players had expected. Heck, it’s the largest trade surplus since May!

Apparently, exports went up by 1.0% from a month earlier while imports stayed flat in August. It also didn’t hurt that exports of iron ore – Australia’s biggest export product – surged. Prices rose by around 11% from a month earlier, while volumes increased by 7.0%. Wowza!

Unfortunately for Aussie bulls, traders mostly shrugged off the rosy numbers in favor of pricing in the surprisingly weak retail sales report.

Major Market Mover(s):

AUD

The Aussie saw the biggest move (and the biggest losses) during the session as Asian session traders shrugged off a strong trade balance report in favor of pricing in a significantly weak retail sales report.

AUD/USD is down by 35 pips (-0.45%) to .7828;
AUD/JPY is down by 37 pips (-0.42%) to 88.26;
EUR/AUD shot up by 54 pips (+0.32%) to 1.6914;
GBP/AUD rocketed by 54 pips (+0.36%) to 1.5016, and
AUD/NZD capped mid-day trading at 1.0944 after hitting a session high of 1.0994.

Watch Out For:

  • 7:15 am GMT: Switzerland’s HICP
  • 7:15 am GMT: Switzerland’s CPI (0.2% expected, 0.0% previous)
  • 8:10 am GMT: Euro Zone retail PMI
  • 8:30 am GMT: ECB’s Peter Praet to give a speech in Frankfurt