The Aussie jumped on Wednesday to a near decade high of NZ$1.3112 after data showed New Zealand retail sales fell the most in seven months in February, as sales at department stores and supermarkets slowed. That led many in the market to pare bets for the Reserve Bank of New Zealand (RBNZ) to kick off its next rate tightening cycle in June.
The gap between Australian and New Zealand swap yields widened to near record highs after anaemic retail sales in New Zealand fed talk that kiwi interest rates may not rise in June. Yet, few doubt New Zealand rates would rise at some point this year, leading many to think the Australian dollar may soon hit a ceiling against the kiwi dollar as the yield gap shrinks.
By late afternoon, the Aussie had retreated a touch to NZ$1.3092. It was strong against the US dollar at $0.9314, after aggressive policy tightening by Singapore's central bank fed talk that it heralded China's revaluation of the yuan. That lifted many Asian currencies. The New Zealand dollar traded at $0.7113, off the day's lows of $0.7088, but still down from Tuesday's $0.7140.
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