The Australian dollar slipped on Monday after making a three-month peak last week, as data showing December retail sales below expectations raised concerns over the economy's lack of momentum. The Australian dollar eased 0.3 percent to $0.7666 after the data, slightly off the three-month peak of $0.7696.
Retail sales slipped 0.1 percent in December, below expectations for a 0.3 percent increase. It was the first monthly decline since December 2015. The data also showed price gains remained very subdued as the retail deflator rose just 0.3 percent in the quarter, a worrying sign for underlying inflation which is below the central bank's target band of 2-3 percent.
Elsewhere, the Aussie slipped against the New Zealand dollar, the euro and the pound. The New Zealand dollar was 0.2 percent higher at $0.7324, rising for a third straight day to stay near a 3-month high.
Investors will watch for the result of the global dairy auction late on Tuesday. Prices had edged up slightly in the last auction following two consecutive declines. The auction results can affect the Kiwi as the dairy sector generates more than 7 percent of the nation's annual economic output.
New Zealand government bonds did not trade due to a public holiday in the country. Australian government bond futures rose, with the three-year bond contract up 2 ticks at 98.02. The 10-year contract climbed 3 ticks to 97.2050. The Aussie has risen 6.5 percent since the start of the year, as the US dollar made a broad retreat as US President Donald Trump's protectionist policies made investors more risk averse. "There remains the broader trend of softer nominal household demand in the second half of last year," said Citi economist Josh Williamson.
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