The Australian dollar has bounced from the eight month low it hit after the release of disappointing retail trade figures.

At 0700 AEST on Thursday, the local unit was trading at 87.33 US cents, up from 86.97 cents on Wednesday.

On Wednesday afternoon, it dropped as low as 86.63 US cents, the currency’s weakest level since late January.

The fall came after retail spending in August rose just 0.1 per cent, worse than the 0.4 per cent rise the market was expecting.

BK Asset Management MD, Boris Schlossberg, said the data disappointed the market but buyers started moving in after the currency got near its 2014 low of 86.60 US cents.

“Overall, the data shows only very modest demand from Australian consumers, recording the weakest reading in three months,” he said.

“Nevertheless, consumer spending continues to expand albeit at a glacial pace and the report marks 15 out of the past 16 months that retail sales have risen in Australia.”

Schlossberg says he expects the Australian dollar to bounce back if it gets near 86.60 US cents again.

“The Aussie is slowly starting to attract some income investors,” he said.

“The economic situation in Australia remains moribund as demand from China has clearly slowed. But the overall economy is not contracting and that dynamic is likely to keep the Reserve Bank of Australia in a neutral policy stance for quite some time.”

Thursday is a busy day for economic events, with the release of building approvals figures and international trade data the highlights.

The RBA will release its annual report and Reserve Bank assistant governor (financial system) Malcolm Edey and head of financial stability Luci Ellis will testify to a Senate inquiry into affordable housing.

AAP