Australian Dollar Surges after Strong Retail Sales Report

The Australian and New Zealand dollars are sharply higher against thanks to a much stronger than expected Australian retail sales number. Consumer spending posted the third straight increase as the strength of the Australian dollar puts a fire sale on imported goods. Even though building permits were much weaker, the market is putting far more weight on the retail sales number.

The Australian government also announced that they will cut taxes before the election this year, which may trigger nice surge in growth. Australian house prices are due for release tonight. The market is expecting a firm number. New Zealand unfortunately is not seeing the same positive indications for growth. In fact, the IMF warned overnight that GDP growth could actually remain below potential for the next 3 years. The kiwi is up today only because the Aussie is up. Meanwhile the Canadian dollar gave back a part of yesterday?s gains after a softer housing starts report. The building permits number released yesterday was for the month of March while today?s housing starts is for the month of April. This suggests that robust growth in Canada may finally be coming to an end.