Australian dlr gains on upbeat retail, NZ$ up on better milk prices

Australian dlr gains on upbeat retail, NZ$ up on better milk prices

© Reuters.  Australian dlr gains on upbeat retail, NZ$ up on better milk prices© Reuters. Australian dlr gains on upbeat retail, NZ$ up on better milk prices

By Swati Pandey and Charlotte Greenfield

SYDNEY/WELLINGTON, April 4 (Reuters) – The Australian dollar breached key technical level of 77 U.S. cents on Wednesday after better-than-expected data on retail sales while its New Zealand cousin climbed to one-week highs on stronger milk prices.

The AUD=D4 added 0.3 percent to $0.7710 from Tuesday’s low of $0.76520. The currency has been flirting with the 77-cent mark in the past week but has been unsuccessful in sustaining gains above that level.

Data showing a 0.6 percent rise in February retail sales was enough to push the Aussie past that barrier. Analysts had looked for only a 0.3 percent increase, following a tepid 0.2 percent uptick in January. figures from the Australian Bureau of Statistics (ABS)showed gains in every single state and territory except the two mining states of Western Australia and Queensland.

All industries from household goods to restaurants and clothing and footwear rebounded.

Other data out on Wednesday pointed to resilience in the housing market. Approvals to build new homes eased 6.2 percent in February, but that followed hefty gains in January.

While traders cheered the upbeat figures, economists appeared less convinced the recovery will last as sluggish wages and household incomes sap spending power.

“February’s retail sales and building approvals figures were both better than expected, but consumption and dwellings investment will probably still be weaker than most expect this year,” said Kate Hickie, economist at Capital Economics.

“Looking ahead, low wage growth and the weak housing market may mean that the annual rate of real consumption growth slows from 2.9 percent in Q4 to just 2.0 percent by the end of this year.”

The data did nothing to alter the outlook for interest rates which are seen staying at a record low 1.50 percent for some time to come. the Tasman Sea, the New Zealand dollar added 0.4 percent to $0.7287 as prices for whole milk powder (WMP), the nation’s largest export, rose at a fortnightly auction. of more note was the fact there were no signs of market panic from the trade skirmish between the US and China,” analysts at ASB Economics said in a note. “Indeed, if anything, the WMP price lift was a positive surprise.”

China has imposed extra tariffs on 128 American products, retaliating against similar measures by the United States, deepening a dispute between the world’s two biggest economies and stoking concerns about the impact on global growth.

“If tensions escalate further and lead to an all-out trade war, then all industries stand to lose, including dairy,” ASB said.

New Zealand government bonds 0#NZTSY= eased, sending yields 4.5 basis points higher at the long end of the curve.

Australian government bond futures fell too, with the three-year bond contract YTTc1 down 2.5 ticks at 97.820. The 10-year contract YTCc1 was off 1 tick at 97.2750. (Editing by Shri Navaratnam)

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