The Australian dollar has slipped to a fresh 10-and-a-half year low, taking it back to global financial crisis levels.

By 12:50pm (AEST), the local currency had dropped to 66.89 US cents. After the Reserve Bank announced its latest decision to leave interest rates on hold at 2:30pm the currency bounced back to 67.1 US cents.

Today's fall was triggered by the latest economic figures, which revealed a set of mixed results on retail spending and the health of the nation's export industry.

Worse-than-expected retail

The Bureau of Statistics' (ABS) retail trade figures were significantly weaker than expected, and paint a gloomy picture for consumer spending and the economy.

Retail sales fell 0.1 per cent in July — a disappointing result, as many economists had expected a rise of 0.2 per cent.

Retail turnover has lifted just 2.4 per cent since last year, its weakest result since January 2018.

Market snapshot at 7:45am (AEST): ASX SPI futures -0.2pc at 6,537, ASX 200 (Monday's close) -0.4pc at 6,579

ASX SPI futures -0.2pc at 6,537, ASX 200 (Monday's close) -0.4pc at 6,579 AUD: 67.14 US cents, 55.65 British pence, 61.21 euro cents, 71.28 Japanese yen, $NZ1.06

AUD: 67.14 US cents, 55.65 British pence, 61.21 euro cents, 71.28 Japanese yen, $NZ1.06 US: (closed for Labor Day public holiday)

US: (closed for Labor Day public holiday) Europe: FTSE 100 +1pc at 7,282, DAX +0.1pc at 11,954, CAC +0.2pc at 5,493, Euro Stoxx 50 +0.2pc at 3,432

Europe: FTSE 100 +1pc at 7,282, DAX +0.1pc at 11,954, CAC +0.2pc at 5,493, Euro Stoxx 50 +0.2pc at 3,432 Commodities: Brent crude -1.1pc at $US58.61/barrel, spot gold +0.7pc at $US1,530.34/ounce, iron ore +7pc at $US90.58/tonne

The weak outcome was led by falls in clothing, footwear and personal accessories (-1pc), cafes, restaurants and takeaway services (-0.6pc) and department stores (-0.2pc).

The ABS noted that online shopping accounted for 6.1 per cent of all retail sales, unchanged from the previous month.

Sluggish household consumption has been a major source of worry for the RBA as the sector accounts for 56 per cent of the economy, and was a major reason policymaker have cut the cash rate twice since June to a record low of 1 per cent.

However, economists said the effects of rate and tax cuts have yet to be felt by households.

"The RBA's back-to-back rate cuts in June and July are yet to have boosted disposable income for the one-in-three Australians who own a home with a mortgage, and the LMITO [low and middle income tax offset] is only just hitting bank accounts," said Ernst & Young's chief economist Jo Masters.

Capital Economics' economist Ben Udy was also optimistic about retail trade for the rest of the year, after those stimulus measures take effect.

"In coming months retail trade might receive a bit of a boost as those tax cuts increase household income," he said.

"With the housing downturn now behind us, we suspect that GDP growth will accelerate a bit in the second half of the year.

"But we expect the labour market to loosen further which should prompt the RBA to cut interest rates to 0.5 per cent by early next year."

Record export surplus

Australia posted a record $5.9 billion current account surplus, driven in large part by surging prices for its key resources — iron ore and coal.

This was the first export surplus since 1975, when Gough Whitlam was prime minister — and was "off the charts" as market analysts were only looking for a $1.4 billion windfall.

Meanwhile, most economists were not surprised by the RBA's decision to leave official interest rates on hold.

But markets are pricing in a 73 per cent chance of rates being lowered at its next meeting in October and a near-certainty of a cut by November.

Trade war 'harder to predict'

Earlier today, by 7:30am, the local currency had lifted sharply to 55.66 British pence on looming Brexit fears.

The pound dropped as British Prime Minister Boris Johnson gathered an emergency meeting, fuelling expectations that he is preparing to call a snap election should lawmakers this week vote to delay Britain's exit from the European Union.

The weaker Sterling boosted London's exporter-heavy FTSE 100 index, which jumped 1 per cent to 7,282.

In comparison, Europe's other major indices underperformed — with Germany's DAX rising 0.1 per cent, and Paris's CAC up 0.2 per cent.

Meanwhile, Wall Street was closed for its Labor Day public holiday, while European markets also had a quiet session with thin trading volumes.

However, US stock futures took a dive after Washington and Beijing acted on their threats to impose new taxes on each other's goods — pointing to a significant drop for Wall Street when it reopens tomorrow.

The United States imposed 15 per cent tariffs on a variety of Chinese imports, and China retaliated by imposing new duties on a $US75 billion worth of US products.

US President Donald Trump has said both sides would still meet for trade discussions later this month.

"The ultimate outlook for the trade dispute has become harder to predict with confidence," said Mark Haefele, chief investment officer at UBS Global Wealth Management.

"Since trade tensions have become the major driving force for stocks, even greater than monetary policy, we advise against adding significantly to equity exposure — particularly for those who have an adequate strategic allocation."

New tariffs could slow global economic growth even further, and commodity prices overnight did not indicate much optimism.

The traditional safe-haven asset, spot gold, rose 0.7 per cent to $US1,530.34 an ounce.

Brent crude oil slumped 1.1 per cent to $US58.61 a barrel, while copper lost 1 per cent to trade at $US5,617.00 a tonne.

Iron ore has surged 7 per cent to $US90.58 a tonne.

According to ANZ economist Daniel Been, sentiment in the iron ore market lifted because "China's State Council reiterated its support for the domestic economy, saying it will maintain reasonably ample liquidity and reasonable growth in aggregate financing.

"Among the points of focus, the country will look heavily at infrastructure projects."

China files WTO complaint

Meanwhile, China has lodged a complaint against the United States at the World Trade Organization (WTO), over its imposition of tariffs against Beijing.

China did not release details of its legal case but said the US tariffs affected $US300 billion of Chinese exports.

The latest tariff actions violated the consensus reached by leaders of China and the United States in a meeting in Osaka, China's commerce ministry said in the statement.

The lawsuit is the third Beijing has brought to challenge Mr Trump's China-specific tariffs at the WTO, the international organisation that limits the tariffs each country is allowed to charge.

US officials say that they are penalising China for theft of intellectual property that is not covered by WTO rules, although many trade experts say that any tariff hike above the allowed maximum must be justified at the WTO.

On Friday the United States published a written defence in the first of the three legal cases, asserting that China and the United States agreed the issue should not be judged at the WTO.

"China has taken the unilateral decision to adopt aggressive industrial policy measures to steal or otherwise unfairly acquire the technology of its trading partners," the US said in its defence.

"The United States has adopted tariff measures to try to obtain the elimination of China's unfair and distortive technology-transfer policies."

Under WTO rules, Washington has 60 days to try to settle the latest dispute. Then China could ask the WTO to adjudicate, a process that would take several years.

It could end with China gaining WTO approval to take trade sanctions, if the United States is found to have broken the rules.

ABC/Reuters