AUD/NZD rebounds firmly from 1.0720 ahead of Australian Retail Sales

The AUD/NZD pair has sensed strength after a correction to near 1.0720 in the early Asian session. The cross is likely to show some action as the Australian Bureau of Statistics will report February’s monthly Retail Sales data. According to the estimates, the economic data is expected to expand by 0.4% lower than the former expansion of 1.9%.

Inflationary pressures in the Australian economy have remained extremely stubborn led by a shortage of labor and robust demand by households. The Reserve Bank of Australia (RBA) has already pushed its Official Cash Rate (OCR) to 3.60% to bring down persistent inflation, however, the Consumer Price Index (CPI) has not reacted in tandem with the velocity of hiking rates. Going forward, softening of retail demand would provide some relief to RBA Governor Philip Lowe and other policymakers.

This week, Australia’s monthly inflation data (Feb) will be keenly watched. Australia’s monthly inflation decelerated dramatically from 8.4% to 7.4% in January, which has cemented hopes of investors that the momentum would continue. The street is anticipating a decline in monthly CPI to 7.1% from the former release of 7.4%. An occurrence of the same would allow RBA policymakers to maintain their intention of pausing the policy-tightening spell from its April meeting.

On the New Zealand Dollar front, investors are worried about the economic outlook of the kiwi economy as flood situation has dented the sentiment of households. This week, investors will focus on New Zealand Building Permits (Feb) data. The economic data is expected to expand by 05% against a contraction of 1.5% witnessed earlier.