NZD gains on strong retail sales

AUD/NZD is coming under pressure early in Asia after retail sales data for NZ came in way ahead of expectations.  

Source: Bloomberg

The headline retail sales reading came in at 1.7% when the market was looking for 1.3%, while the core retail sales reading was up 1.5% (ahead of 1.1% consensus). Once again playing the divergence will remain the preferred strategy this year and with Australia having an easing bias then there is room for further weakness in the pair.

In Australia we have monetary policy meeting minutes tomorrow, but after the detailed testimony from Friday, I doubt these will change sentiment much. AUD/NZD has now slipped under 1.0400 and could be headed to the January low at 1.0355. Analysts continue to talk about the pair hitting parity this year and given the current momentum in the price action, this is a real possibility. 

AUD/NZD chart

AUD/NZD chart
Source: IG Charts

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