CANBERA (dpa-AFX) - The Australian dollar edged lower against its major rivals in early Asian deals Wednesday, as the nation's weaker-than-expected retail sales figures for December signalled that the Reserve Bank of Australia might ease its policies in March to sustain the economic growth and the inflation target.
Retail sales were down a seasonally adjusted 0.2 percent in December, the Australian Bureau of Statistics said. That was well shy of forecasts for an increase of 0.3 percent, following the upwardly revised 0.2 percent contraction in November.
For the fourth quarter of 2012, retail sales added just 0.1 percent compared to the previous three months. That also missed forecasts for an increase of 0.3 percent, which would have been unchanged from the previous month following an upward revision.
The downbeat data prompted traders to sell the aussie across the board as the market looks for the nation's jobless rate, which will be released tomorrow. The unemployment rate is expected to grow 5.5 percent in January from 5.4 percent in December.
The Reserve Bank of Australia on Tuesday signaled that there is enough room to ease monetary policy further, if necessary, to support demand as it held the benchmark cash rate unchanged at 3 percent.
Announcing the decision, RBA Governor Glenn Stevens said the current inflation outlook, which is consistent with the target, provides room to loosen policy further. The decision was in line with expectations.
'The inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand,' the bank said.
The Australian currency reached 1.2252 against NZ dollar, its weakest level since July 2010 and down by more than 0.3 percent from Tuesday's close of 1.2292. The aussie is expected to extend downtrend towards the key 1.2220/30 support level, its 50.0 percent retracement target.
The Aussie slipped below the 1.0350 area against the US dollar for the first time in 2013. The Australian dollar depreciated 0.4 percent to a 6-week low of 1.0348 against the greenback from yesterday's close of 1.0392. The next downside target level for the pair is seen at 1.0290.
The Australian currency also fell to a 5-day low of 1.3137 against the euro, having declined from yesterday's 6-day high of 1.2910. The aussie is expected to extend downtrend beyond the 1.32 level as yesterday's rally seems to have a correction in the EUR/AUD currency cross.
The Australian dollar reached nearly a 5-week low of 1.0315 against the Canadian dollar following the data. The next downside support for the AUD/CAD pair is seen at 1.0290 and a move below that could help the pair retrace its 50.0 percent target at 1.0240.
The Australian dollar declined even against the flaccid Japanese currency, falling back a tad below the 97.0 level immediately following the data. The aussie-yen pair is now hanging in the 97.0 area and the extension of bear run could lead the pair re-test the 96.0 level.
The yen extended its overnight drop against majority of its key counterparts following the news that the Bank of Japan governor Masaaki Shirakawa would retire three weeks earlier than expected.
His retirement three weeks earlier than planned boosted scope of further yen selling as the new government under Shinzo Abe would appoint a governor more likely to get tough on deflation and weaken the yen.
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