Australian Dollar Lower on Soft Retail Sales

 
   By James Glynn 
 

        SYDNEY--The Australian dollar was sharply lower Friday on news of weaker-than-expected retail sales for May, which has kept the door open to an interest rate cut later this year.
        Retail sales rose by 0.3% in May from April, the Australian Bureau of Statistics said Friday, weaker than the 0.6% increase economists had been expecting.
        The small rise was confined mainly to New South Wales, with retail sales in all other major states remaining relatively flat. Sales for April were revised downwards to show a 0.1% drop, compared with the flat result originally reported.
        Despite record-low interest rates, consumer spending across the economy remains restrained overall, economists said.
        "The Reserve Bank of Australia would have been a little surprised and probably disappointed with the soft retail sales data for May," said Su-Lin Ong, economist at RBC Capital Markets.
        "Today's data remain consistent with a mild easing bias," she added.
        The Reserve Bank of Australia will meet Tuesday with markets betting the key rate will be kept unchanged at 2.0%.
        JPMorgan chief economist said he is expecting little news to emerge from the policy meeting. The RBA last lowered rates in May and February.
        "We expect no change to the cash rate or material changes to the tone of the (RBA's) commentary," said Stephen Walters, chief economist, Australia. "Our expectation is that the RBA is in a holding pattern as officials watch developments domestically and offshore, including the troubling events in Europe."
        At 0615 GMT, the Australian dollar was trading at US$0.7583, compared with US$0.7635 late Thursday.
        -Write to James Glynn at james.glynn@wsj.com
        (END) Dow Jones Newswires

        July 03, 2015 02:33 ET (06:33 GMT)

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