Forex - Australia dollar holds early gains as retail sales mixed

The Australian dollar held early gains on Thursday with retail sales mixed and a focus overall on concerns Greece will be unable to reach agreement on restructuring its sovereign debt.

AUD/USD traded at 0.7769, up 0.22%, while USD/JPY changed hands at 117.15, down 0.01%. EUR/USD traded at 1.1343, down 0.01%.

Late Wednesday, the European Central Bank abruptly cancelled its acceptance of Greek bonds in return for funding. The move means the Greek central bank will have to provide its banks with tens of billions of euros of additional emergency liquidity in coming weeks.

China's late Wednesday move to cut the amount of cash banks keep in reserve to 19.5% from 20.0%, also played out on the currency market Thursday as Beijing moves to boost lending and spur economic activity in the world’s second largest economy.

In Australia, December retail sales rose 0.2% month-on-month,below a 0.4% gain month-on-month expected, but at a fourth quarter gain of 1.5% quarter-on-quarter, above 1.0% expected.

Retail sales rose less than expected in December but, on a quarterly volume basis, exceeded consensus thanks to strong growth in household goods and an increase in clothing and footwear and department-store sales.

Overnight, the dollar pushed higher against the other major currencies on Wednesday, boosted by data showing that U.S. service sector activity grew at a faster rate than expected in January, while concerns over Greece's future in the euro zone continued to weigh on sentiment.

In a report, the Institute of Supply Management said its non-manufacturing purchasing manager's index increased to 56.7 last month from a reading of 56.2 in December. Analysts had expected the index to inch up to 56.3 in January.

The data came after payroll processing firm ADP said non-farm private employment rose by 213,000 last month, below expectations for an increase of 225,000.

The economy created 253,000 jobs in December, whose figure was upwardly revised from a previously reported 241,000.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was quoted at 94.52, down 0.06%.