Australia, NZ dollars buffeted by geopolitics, mixed data
- The kiwi dollar faded to $0.5925, after losing almost 1% the previous session
SYDNEY: The Australian and New Zealand dollars fell on Tuesday as a lack of clear progress in Middle East peace talks weighed on risk assets, while domestic economic news was too mixed to offer much impetus.
The Aussie dipped to $0.7157, after easing 0.3% overnight and away from resistance around $0.7200. Support lies at $0.7135 and $0.7080.
The kiwi dollar faded to $0.5925, after losing almost 1% the previous session.
The failure at $0.5993 resistance puts the focus on support around $0.5816.
A raft of Australian data showed trade was a bigger drag on the economy than thought in the first quarter as bad weather hit commodity exports, while imports of data centre equipment and fuel jumped.
In all, net exports took 0.8 percentage points off gross domestic product, above forecasts of 0.5 percentage points.
Other figures showed government spending made no contribution at all to growth, while inventories added 0.2 percentage points.
Still, all the spending on data centres should show in stronger business investment, and analysts generally expect the economy grew 0.5% in the first quarter and an above-trend 2.6% for the year.
Also announced on Tuesday was a 4.75% rise in the minimum wage for 2026/27, a little higher than some analysts had expected and a complication for the Reserve Bank of Australia’s fight against inflation.
“To the extent the decision acts as a benchmark across wage setting in the economy, there is a risk that inflation expectations remain elevated for longer, making the RBA’s job harder,” said Ryan Wells, an economist at Westpac.
“That said, the gradual easing in the labour market and slowdown in the economy will reduce this risk.”
Speaking on Tuesday, RBA board member Ian Harper noted that market measures of future inflation were creeping higher in a worrying development for expectations. Markets have given up on the chance of another RBA rate hike this month, but remain at 50-50 for August and are almost fully priced for a peak of 4.60% by year end.
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