There was positive economic data from Australia and New Zealand Wednesday which saw the countries' currencies fall from one-month highs as the information suggested their central banks will maintain low interest rates for an extended period to assist economic growth and lower unemployment.
The Australian dollar was last down 0.1% at $0.7717 from a one-month top of $0.7816 reached Tuesday. The New Zealand dollar was flat at $0.7171 after going as high as $0.7227 Tuesday.
In the data, New Zealand's Consumer Price Index increased 0.8% quarter over quarter in the first three months following a 0.5% rise in the previous quarter and beating expectations of a 0.7% gain. The annual inflation rate in New Zealand increased to 1.5% in the first quarter of 2021 from 1.4% in the previous three months and compared with market expectations of a 1.4% gain, according to Statistics New Zealand.
Moody's Investors Service said New Zealand's economy showed "very strong institutions and policy effectiveness. A robust fiscal position compared with peers...ample fiscal flexibility to respond to both long-term spending needs related to social demands, or a potential sudden rise in expenditure to support the economy in a subsequent downturn. External risks stem from the country's reliance on soft commodities exports and its net international liabilities, which despite having narrowed, remain large compared with Aaa-rated peers.
"We expect New Zealand's economy to remain resilient in the face of external headwinds because of its trade openness, diverse and competitive agricultural export base, flexible labour and product markets, high wealth levels and supportive demographics, driven by solid net immigration," it said.
Across the pond in Australia retail sales rose by 1.4% month over month in March 2021 from a final 0.8% drop in the month earlier and beating market estimates of a 1% increase as a result of an improvement in consumer confidence and a reopening of state borders following an easing of the COVID pandemic, according to the Australian Bureau of Statistics.
Australian Retailers Association chief executive Paul Zahra said retail performance was underpinning Australia's economic recovery. "The retail industry has been resilient throughout COVID, navigating its way through state-imposed lockdowns and restrictions - and despite all the challenges that have been thrown at them, many of these businesses are helping drive Australia's economic recovery."
"As expected, whilst we haven't experienced a fiscal cliff, we have seen a softening of sales as we cycle the panic buying from the beginning of the pandemic. The vaccination rollout is now imperative to boosting consumer confidence and safety."
The Westpac-Melbourne Institute Leading Economic Index in Australia rose 0.38% month over month in March after an upwardly revised 0.16% gain a month earlier. Meantime, the six-month annualized growth rate, which indicates the likely pace of economic activity relative to trend three to nine months, advanced 3.29%, according to Westpac Banking Corp. and the Melbourne Institute
The index examines movements in the leading indicators of economic activity. It anticipates and identifies turning points in the economy - including local financial, housing and labor markets, consumer expectations about activity and unemployment and international economic activity.
"The reopening of the economy; cashed up households; and an 11 year high in Consumer Sentiment all point to strong spending.
"The housing market is booming. Westpac expects dwelling price growth of 15% in 2021 along with surging dwelling construction," according to Macrobusiness Fund and Macrobusiness Super Chief Strategist David Llewellyn-Smith.
