The Australian dollar tumbled in trading today before making a comeback, after weaker than expected retail sales from the US added more fuel to the fire on the timing of a potential rate hike from the US Federal Reserve.

At 7.24pm (GMT) the Aussie dollar was trading at US72.72c after reaching a low of US71.98c earlier in the day.

Retail sales in the US rose by a modest 0.1% against analysts’ expectations of a 0.2% rise, although sales of cars and some other goods helped to underpin domestic demand and may help the economy stay on track.

This latest number, which followed on from the disastrous Non Payrolls figure, causes another headache for the Fed in their quest to raise interest rates, with only 12% of analysts polled predicting a rate hike next month.

In a shock move, Westpac, one of Australia’s leading banks, suddenly increased the interest they charge on home loans by 20% which is likely to frighten investors and dent confidence in the property market.

The move is likely to put pressure on the Reserve Bank of Australia to cut interest rates from their record low of 2% with analysts now pricing in a 52% chance of a reduction by the end of the year.