The Australian dollar slipped from an eight-month high and down towards 77 US cents on Monday as retail sales data merely validated last week's interest rate rise and a private survey indicated slower jobs growth on the horizon.
The Aussie had touched a high of 77.45 cents on Friday as the US dollar weakened on a payrolls report that suggested the US Federal Reserve may be close to pausing in its two-year tightening cycle.
The AUD was $0.7711/16, compared with $0.7681/86 late here on Friday.
The US dollar weakened further in Asian trading, falling one percent to an eight-month low against the yen after a US Treasury official said on Friday that Japanese policy makers should restrain from intervening verbally on currencies.
The Aussie also fell against the yen, trading at 86.07/17 yen, compared with 87.33/43 late here on Friday.
"While we think the Aussie will lag the yen over the long-term, it is likely to strengthen further in the context of USD weakness and strong commodity prices," UBS strategist Ashley Davies said.
UBS has upgraded its long-term Aussie forecasts in recognition of rising commodity prices, and is now targetting 77 cents at end-2006 compared to 75 cents previously, and 79 cents for end-2007 from 70 cents.
March retail sales grew at a slightly slower-than-forecast 0.3 percent, but first-quarter retail sales in volume terms jumped a strong 1.7 percent, making a large contribution to first-quarter gross domestic product. Forecasts had centred on a 1.3 percent rise for the quarter.