SYDNEY: The Australian dollar slipped on Friday after disappointing retail sales data for December though it was still on track for a strong weekly rise while its New Zealand peer was slightly weaker as well.

The Australian dollar went as low as $0.7743 after preliminary data for December showed a larger-than-expected 4.2% drop in retail sales which was spread across five of the six retail categories, led by household goods.

While the data was disappointing, analysts said the decline was not a cause for concern after a sharp 7.1% rise in November.

December's drop "should not be taken as a signal that the economy is weakening," National Australia Bank economist Tapas Strickland said, noting retail sales were still up 9.2% from pre-pandemic February levels.

"The data late 2020 and into 2021 has continued to surprise to the upside with the roll-back of government support...so far not having an overwhelming impact on the aggregate economy."

The Aussie is up 0.6% so far this week with the outlook supported by Australia's success in controlling the coronavirus pandemic with around 22,000 local COVID-19 cases since March 2020.

A rally in global risk assets led by expectations of more economic stimulus in the United States under newly inaugurated President Joe Biden has also boosted the fortunes of the antipodean currencies.

The New Zealand dollar was down 0.3% at $0.72.

For the week, the kiwi dollar was up about 1%.

Markets have greatly scaled back the chance of any further policy easing in New Zealand given the surprising strength of its economy.

Westpac on Thursday ditched its call for two more rate cuts from the Reserve Bank of New Zealand (RBNZ) and forecast rates would be held at 0.25% for the foreseeable future.

Westpac also expects the RBNZ will gradually taper the pace of bond purchases over the course of the year to around NZ$500 million, from the recent average of NZ$800 million.