The Australian dollar was nursing a sizeable weekly loss on Friday, even as data on retail sales outpaced all forecasts, a sign of how weeks of bushfires have darkened the mood toward the economy.
The Aussie was all but flat on the day at $0.6856 <AUD=D3> to leave it down 1.2% on the week so far and only a whisker above chart support at $0.6850.
Just a couple of weeks ago it had been as high as $0.7032.
The New Zealand dollar was dragged down in its wake to stand at $0.6608 <NZD=3>, a drop of 0.8% for the week. Support lies at $0.6600 and $0.6555.
The Aussie barely reacted when figures showed retail sales jumped 0.9% in November, the largest increase in two years and well above expectations of 0.4%.
Analysts suspected the rising popularity of special sales events in November such as Black Friday were merely eating into the Christmas effect.
"It remains to be seen how much of this spending was brought forward from traditionally strong December," said Sarah Hunter, chief economist for BIS Oxford Economics.
"Consumer confidence surveys suggest that households are becoming increasingly concerned about the economic outlook and some retailers have reported that December was disappointing."
Sentiment has taken a hard knock from the bushfires scorching the southern and eastern coasts, shrouding cities in harmful smoke and disrupting the tourist trade at the height of summer.
Markets have narrowed the odds on another rate cut from the Reserve Bank of Australia (RBA), which has already eased three times to a record low of 0.75%.
Futures <0#YIB:> currently imply about a 40% chance of a quarter-point easing in February, rising to 66% by April.
Bonds were thus untroubled by the seemingly strong data and three-year futures <YTTc1> edged up 0.5 ticks to 99.210. The 10-year contract <YTCc1> was steady at 98.7450, implying a yield of 1.255%.
(Editing by Clarence Fernandez)
