US retail sales increase and drive dollar down

Key Movers

Brexit trade talks continue to yield little progress while increasing COVID restrictions dampen any hope for a rebound in economic activity. With the EU leaders summit beginning today, there will be more clarity surrounding Brexit negotiations. Will the talks continue through the coming weeks? The summit will reveal if compromises have been made, or abandoned, and if a hard Brexit becomes reality.Yesterday the EU’s chief negotiator, Michel Barnier, said that negotiators would do everything they can to reach a deal but not at any price. “We have prospects of a deal, but a lot of work still needs to be done,” said Barnier.The Australian dollar retreated Thursday, continuing the weeks downward trend in what was a typical risk off session. Equities and stocks trended lower as investors looked to haven assets following tighter social distancing restrictions across Europe and a downturn in US domestic data sets. Having opened at 0.7170, the AUD tracked lower throughout the domestic session as the weight of recent comments from RBA governor Phillip Lowe weighed on the currency. Lowe announced the country’s central bank was reviewing the possibility of further monetary policy easing. In a Q&A session Lowe suggested an interest rate cut to 0.1% was now appropriate given the worst of the pandemic shock was over, allowing the impact of rate adjustments to filter through to the real economy. Lowe’s comments all but guarantee a rate cut next month, an adjustment we expect will be accompanied by upgraded in Quantitative Easing measure.