Talking Points:

US Dollar May Sold as Treasury Yields Sink Amid Risk Aversion
Soft US Retail Sales Data May Amplify Dollar Selling Pressure
Australian Dollar Down as Jobs Data Weighs on RBA Outlook

January’s US Retail Sales report headlines the economic calendar in the hours ahead. Expectations call for a flat result, an outcome that would represent the fourth consecutive month of slowing receipts growth and the softest single reading since March 2013. US economic news-flow has increasingly underperformed relative to consensus forecasts since mid-January. This suggests analysts continue to underestimate the slowdown in the recovery and opens for another disappointment.

The US Dollar is under pressure overnight, tracking US Treasury yields lower as a slump across Asian and European stock markets fuels safe-haven demand for bonds, sending prices higher. A soft US Retail Sales number against a backdrop a Federal Reserve committed to continue “tapering” QE asset purchases may amplify global growth concerns and fuel continued risk aversion. That threatens to continue eroding yield support for the greenback, pushing prices lower.

The Australian Dollar underperformed in overnight trade after January’s Employment data showed the economy unexpectedly lost 3,700 in January. Forecasters were calling for a 15,000 increase before the data crossed the wires. The unemployment rate rose to 6 percent, the highest in over a decade. The weighed against monetary policy expectations, the “period of stability” discussed at last week’s RBA meeting will not soon give way to renewed interest rate hikes.

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