The Australian and New Zealand Dollars continue to work their way higher on the back of stronger demand for risky assets and commodities as investors turn more optimistic about the recovery of the global economy amid the easing of lockdowns and restrictions.
In another case of investors shrugging off stale data and looking forward to a better future, the Aussie is actually firming after a report showed a 17.9% plunge in retail sales.
Australian Retail Sales Dive
Australian retail sales slumped in April after a record surge the previous month as widespread restrictions to curb the spread of the coronavirus hit demand for clothing, travel and dining out.
The Australian Bureau of Statistics (ABS) reported on Wednesday its preliminary estimate of retail sales plunged a seasonally adjusted 17.9% in April, its biggest ever, from an 8.5% jump in March. The final estimate is due on June 4.
Australian Cashless Retail Sales Index Falls
National Australia Bank’s cashless retail sales index, which measures debit card, credit card and other cashless spending on NAB platforms, fell 5.3% in April.
Reserve Bank of Australia Monetary Policy Meeting Minutes
Australia is facing an “unprecedented” economic contraction due to the coronavirus pandemic, though massive fiscal and monetary stimulus would help cushion the blow, minutes from the country’s central bank’s last meeting showed on Tuesday.
The minutes showed board members discussed a range of economic scenarios in their policy deliberations, with the baseline case for gross domestic product to fall by 10% in the first half and 6% for all of 2020.
“An economic contraction of such speed and magnitude would be unprecedented in the 60-year history of Australia’s quarterly national accounts,” the RBA said.
“Members noted that the nature of the contraction and the expected recovery was also unprecedented because they were driven by public health measures, rather than induced by economic or financial factors.”
On Wednesday, Aussie and Kiwi traders will be focusing on the U.S. Federal Reserve’s Monetary Policy meeting minutes, due to be released at 18:00 GMT. The minutes are likely to say the same thing that Fed Chair Powell has been saying all week, that the Fed has the fire power to support the economy, but it’s going to need fiscal help from the government.
This article was originally posted on FX Empire
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