"The net result of the retail sales and international trade data for August isn't a complete disaster for the economy. But the weakness in retail sales supports our long-held view that a slowdown in consumption growth is one reason why the RBA won't raise interest rates at all next year," said Capital Economics chief Australia and New Zealand economist Paul Dales, in a note.
The July result was also revised down to a 0.2 per cent decline from a preliminary flat reading so it was a "bit of a double whammy," said Martin Rudings, a senior dealer at OMF.
"The Aussie got sold but most of the business was translated through buying kiwi against Aussie, which is why the kiwi has held up," he said. Rudings said it initially tried to follow the Aussie lower but "I think the safer trade - if you want to be short Aussie - is to go a longer on the kiwi and take the US component out. You might end up with a position going through payrolls and it would be a lot safer to have a kiwi-Aussie than an Aussie-US trade on," he said.
"it's a down-under play," he said, adding there is unlikely to be much more action as markets will be largely treading water ahead of Friday's jobs data in the US.
The official payrolls figures are expected to show some weakness after Hurricanes Harvey and Irma, with a forecast of just 90,000 jobs added by US employers last month.
The local currency traded at 54.01 British pence from 54.13 pence yesterday and fell to 60.84 euro cents from 61.03 cents. It decreased to 80.64 yen from 80.90 yen and dropped to 4.7591 yuan from 4.7791 yuan. The trade-weighted index fell to 75.55 from 75.74.
New Zealand's two-year swap rate rose 1 basis point to 2.19 per cent, and 10-year swaps fell 1 basis point to 3.23 per cent.
