Australian retail sales Dec under-delivers; heightened expectations RBA cut

Retail sales in Australia came much lower-than-expected, down 0.2% in December vs a +0.3% rise analysts had been calling for. To make it worse, previous month -0.1% was revised lower to -0.2%.

The data is surprising, as December is typically a month where sales usually get a nice boost. The quarterly data was also poor, at +0.1 in Q4 vs +0.3 expected. The previous quarter was revised from -0.1% to -0.3%.

The 0.5bp deviation between the consensus data and the actual number has taken its toll on the Aussie down over 30 pips to now threaten key support at 1.0360. The data adds weight for an RBA cut in March. Market now pricing a 50% chance of cut vs 45% prior to the retail data.