The AUD/NZD currency pair extended a rebound from recent one-week trough on Tuesday ahead of a policy decision by the Reserve Bank of New Zealand.
The RBNZ is largely expected to keep interest rates on hold at 5.5% at its policy meeting tomorrow in light of softer inflation and employment.
Still, investor focus will likely be on the timing of the first rate cut, which the RBNZ currently expects no sooner than early 2025.
“On balance, recent data will have left the RBNZ more comfortable with an ‘on hold’ stance,” Westpac analysts wrote in an investor note.
“It will be keen to ensure as much of the recent increase in mortgage rates remains in place for a while.”
On the macroeconomic front, Australia’s retail sales surprisingly shrank 0.2% month-over-month in October, preliminary data showed on Tuesday. Market consensus had pointed to a 0.1% growth.
It has been the first drop in retail trade since June, as consumers paused some discretionary spending in anticipation of Black Friday sales events.
In October, sales dropped for most categories – household goods retailing (by 0.6%), clothing and footwear (by 1%), department stores (by 0.6%), other retailing (by 0.4%), cafes, restaurants and takeaway food (by 0.4%).
On the other hand, food sales rose 0.5% month-over-month, while easing after a 1% growth in September.
As of 8:44 GMT on Tuesday AUD/NZD was edging up 0.24% to trade at 1.0849. Last Friday, the minor Forex pair went down as low as 1.0800. The latter has been the pair’s weakest level since November 16th (1.0792).
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