Economic news

Australian dollar slips, shrugging strong sales data

SYDNEY, Dec 22 (Reuters) - The Australian dollar was lower against the greenback in a low-volume session on Tuesday, shrugging strong retail sales data as a new strain of COVID-19 weighs on market sentiment ahead of the Christmas holiday long weekend.

The Aussie was 19 basis points lower at $0.7572 in Asia trading, following a roller coaster session on Monday that saw it recover after falling over 2% to close at $0.7587, as concerns about a new coronavirus strain hit riskier assets.

The kiwi was also lower at $0.7078 on Tuesday, after closing at $0.7096 the previous session.

Despite recent declines, both currencies are on track for their second consecutive month of gains, rallying in recent weeks as the prospect of a vaccine-fuelled global recovery next year boosted risk assets and toppled the safe-haven U.S. dollar.

“Doesn’t matter where you look at, everything just had an extreme move to the top side over the last couple of months,” said Steven Dooley, APAC currency strategist at Western Union Business Solutions.

“That creates the conditions where we can see investors taking profits or more of a sell-off over the next couple of days.”

Both currencies had also been buoyed by the outperformance of their domestic economies, where the coronavirus has been mostly contained, and the broad strength of global commodity prices.

But fears that a highly infectious new strain of COVID-19 that shut down much of Britain could lead to a slower global economic recovery is triggering losses across risk assets.

In Australia, the subdued sentiment and a new outbreak in Sydney also extended losses in equities with investors shrugging off figures on Tuesday showing retail sales soared 7% in November, led by pre-Christmas shopping.

Australian 10-year yields were little changed at 0.96% , while three-year bond futures were one and a half ticks higher at 99.815.

New Zealand yields on 10-year bonds were slightly higher at 0.99%, from 0.97% on Monday.

(Editing by Lincoln Feast)

Source: Reuters

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