SYDNEY: The Australian and New Zealand dollars looked to consolidate five sessions of gains on Wednesday as upbeat economic data from China provided a welcome contrast to all the global trade gloom.
Figures on retail sales and industrial output for March were well above forecasts, suggesting the domestic economy was building momentum before U.S. tariffs hit.
That helped nudge the Aussie up to $0.6356, after touching a high of $0.6381 overnight. It still faces stiff chart resistance in the $0.6395/6409 zone, which stymied three previous rallies.
The kiwi dollar firmed to $0.5905, after hitting a five-month peak of $0.5943 overnight. A sustained break of $0.5929 would open the way to a November peak at $0.6037.
The kiwi’s rally is all the more striking in that it came despite the Reserve Bank of New Zealand last week cutting its official cash rate to 3.5% and flagging yet more to come.
Analysts at ANZ warned that uncertainty over the impact of tariffs globally could hinder consumer and business spending, requiring more policy easing.
“We are adding two more OCR cuts to our forecasts, in August and October, which takes the OCR to a low of 2.5% rather than our previous forecast of a 3% trough,” said Sharon Zollner, head of NZ economics at ANZ.
Australia, NZ dollars extend winning streak as greenback loses lustre
“The risk that the NZD may hold up better than it has in previous global ructions - should the USD come under pressure - also implies a risk that the OCR will need to do more work.”
Markets are fully priced for another quarter-point cut at the next RBNZ meeting in late May and rates at 2.75% or lower by the autumn.
One potential hurdle is data on first-quarter consumer prices due on Thursday where a rise of 0.7% is expected.
The Reserve Bank of Australia skipped a rate cut this month, but markets have fully priced in a 25=basis=point reduction to 3.85% in May.
Australia’s consumer price report is due next week and expected to show the trimmed mean measure of core inflation slowed to 2.8%, from 3.2%, putting it back in the RBA’s 2% to 3% band for the first time since late 2021.
Analysts at Goldman Sachs are tipping a trimmed mean of just 2.5%, which would be a major surprise and a green light for a half-point rate cut in May.
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