Weak New Zealand Retail Sales Sends Commodity Currencies Tumbling

[DailyFx]

The Australian, New Zealand and Canadian dollars have all succumbed to dollar strength today despite firmer commodity prices. New Zealand retail sales were much weaker than expected in the month of April.

After four straight months of gains, spending dropped by the biggest amount in 3 years. Vehicle sales, which are impacted by interest rate levels accounted for approximately 50 percent of the decline. Softer wage growth and consumer spending is certainly a problem and even though the RBNZ is still expected to raise interest rates this year, they may opt to wait until the third quarter. Meanwhile Australian consumer inflation expectations edged higher this month, but Australian Governor Stevens has a very different take. He actually feels that the inflation outlook gives the central bank time to assess economic data before making any changes to monetary policy. Weak data and a less hawkish stance have driven both currencies lower.