Australian dollar struggles to get any lift from upbeat data

[SYDNEY] The Australian dollar was nursing a sizeable weekly loss on Friday, even as data on retail sales outpaced all forecasts, a sign of how weeks of bushfires have darkened the mood toward the economy.

The Aussie was all but flat on the day at US$0.6856 to leave it down 1.2 per cent on the week so far and only a whisker above chart support at US$0.6850.

Just a couple of weeks ago it had been as high as US$0.7032.

The New Zealand dollar was dragged down in its wake to stand at US$0.6608, a drop of 0.8 per cent for the week. Support lies at US$0.6600 and US$0.6555.

The Aussie barely reacted when figures showed retail sales jumped 0.9 per cent in November, the largest increase in two years and well above expectations of 0.4 per cent.

Analysts suspected the rising popularity of special sales events in November such as Black Friday were merely eating into the Christmas effect.

"It remains to be seen how much of this spending was brought forward from traditionally strong December," said Sarah Hunter, chief economist for BIS Oxford Economics.

"Consumer confidence surveys suggest that households are becoming increasingly concerned about the economic outlook and some retailers have reported that December was disappointing."

Sentiment has taken a hard knock from the bushfires scorching the southern and eastern coasts, shrouding cities in harmful smoke and disrupting the tourist trade at the height of summer.

Markets have narrowed the odds on another rate cut from the Reserve Bank of Australia (RBA), which has already eased three times to a record low of 0.75 per cent.

Futures currently imply about a 40 per cent chance of a quarter-point easing in February, rising to 66 per cent by April.

Bonds were thus untroubled by the seemingly strong data and three-year futures edged up 0.5 ticks to 99.210. The 10-year contract was steady at 98.7450, implying a yield of 1.255 per cent.

REUTERS