Asia Market News: Retail Sales to Keep Pressure on the RBA and the Bank of Japan

Bob Mason
Published: Feb 29, 2024, 02:33 UTC

Key Points:

  • Australian retail sales figures give the RBA more reason to consider holding interest rates for longer.
  • Sticky Australian inflation and an upward trend in Australian consumer spending contributed to early gains for the AUD/USD.
  • In contrast, the Asian equity markets saw early losses as investors considered US inflation numbers out later today.
Asia Market News

In this article:

Aussie Retail Sales Deliver RBA Rate Path Uncertainties

Following Australian inflation numbers on Wednesday, investor interest turned to Australian retail sales on Thursday.

Retail sales increased by 1.1% in January after sliding by 2.1% in December. Economists forecast retail sales to increase by 1.5%.

According to the ABS,

  • Spending on clothing, footwear, and personal accessories increased by 2.4%.
  • Household goods retailing rose by 2.3% in January.
  • Department store sales and spending on other retailing increased by 1.7% and 1.7%, respectively.
  • However, spending on food retailing declined by 0.1%.
  • Compared with January 2023, retail sales were up 1.1%.

According to ABS Head of Retail Statistics Ben Dorber,

“Retail turnover was unchanged in trend terms in January. This means there has been no growth in retail turnover when we look through the volatility of the past few months.”

Dorber added,

“Rather, spending patterns have shifted because of changes in seasonality around Black Friday as consumers took advantage of discounting in response to cost of living pressures.”

Nevertheless, the AUD/USD initially dropped to a low of $0.64906 before rallying to a post-stat high of $0.65036 in response to the increase in retail sales.

AUD/USD reacts to Aussie retail sales.
AUDUSD 30 Minute Chart 290224

In contrast to the Aussie dollar reaction to the retail sales report, the ASX 200 was in negative territory. The ASX 200 was down 0.12% to $7,650.9. The ASX 200 tracked US equity market losses from Wednesday. Jitters about US inflation and the Fed impacting buyer demand.

ASX 200 saw red in the morning session.
ASX200 30 Minute Chart 290224

USD/JPY Eyes Sub-150 Ahead of US Inflation Numbers

On Thursday, the USD/JPY was on the back foot despite the jitters about US inflation numbers out later today. The USD/JPY was down 0.26% to 150.299.

Retail sales figures from Japan supported bets on an April Bank of Japan pivot from negative rates. In January, retail sales increased by 0.8% month-on-month after sliding by 2.9% in December.

An upward trend in retail sales could fuel demand-driven inflation and enable the BoJ to exit negative rates. While the spring wage negotiations will be pivotal, the retail sales figures ticked a box for the BoJ. The weaker USD/JPY impacted the Nikkei, which fell by 0.33% in the morning session.

USD/JPY hit reverse on Thursday.
USDJPY 30 Minute Chart 290224

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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