Australian Retail sales dropped for the first time in ten months sending the Aussie through the .9800 barrier in Asian session trade as risk aversion flows intensified. Australian Retail Sales missed their mark contracting by -0.2% versus 0.2% eyed as spending at department stores fell 1 percent, and consumers spent 0.8 percent less on household goods.
The report shows that consumers Down Under continue to curb their spending despite aggressive monetary easing by the RBA suggesting that Australian monetary authorities may have have to lower rates further in order to stabilize demand. Markets are now pricing a 25bp cut at the June 5th meeting with odds of a 50bp cut rising to 38%.
The news drove Aussie through the .9800 barrier as traders in Asia responded negatively to the data amidst a continued selloff in risk that saw EUR/USD and GBP/USD decline further as well. The pair is now grossly oversold and may be due for some weak dead cat bounce if equity flows stabilize during European trade, but short no doubt will try to press their advantage targeting a retest of yearly to date lows at .9668 over the next several days.