The Australian and New Zealand dollars found some support on Wednesday as upbeat domestic data provided a temporary distraction from worries about a global recession.
The Aussie edged up a fraction to $0.6914 AUD=D3 , but remains walled-in by resistance at $0.6956 and support around $0.6870.
The kiwi dollar nudged 0.1% higher to $0.6250 NZD=D3 , though that followed a 1% drop overnight to as far as $0.6238. The failure to break above $0.6325 resistance suggests risks favour a test of its June trough at $0.6292.
Both received a lift when China slashed the quarantine time for inbound travellers by half on Tuesday, but the gains were quickly eroded by more soft U.S. economic data.
In contrast, Australian retail sales surprised with a solid increase of 0.9% in May handily topping forecasts of a 0.4% gain. Sales were up a sizable 10.4% on May last year, though some of that is due to higher prices rather than volumes.
The robust figures will underpin the Reserve Bank of Australia's (RBA) confidence that consumers can handle higher interest rates as it prepares for another likely hike at its July policy meeting next week. RBAWATCH
Markets
0#YIB: are odds-on for another rise of 50 basis points to 1.35%, and for a similar move in August.Rates are seen up around 3.25% by the end of the year and near 4% in 2023, though RBA Governor Philip Lowe has suggested such a drastic tightening would seriously damage the economy.
"The strong rise in retail sales highlights the strength in the economy consistent with our view that the RBA will continue to hike rates aggressively in the months ahead," said Ben Udy, an economist at Capital Economics.
"We think services consumption is ramping up, and households have a large build-up of savings they can use even if they are being financially conservative."
