AUD/NZD snaps two-day winning streak on stagnant Australia Retail Sales growth, mixed RBNZ concerns

• AUD/NZD takes offers to refresh intraday low as Aussie Retail Sales eased in April.
• RBNZ Officials flash mixed signals after failing to impress markets with 0.25% rate hike.
• Cautious markets also exert downside pressure on exotic pair price.

AUD/NZD drops to 1.0710 as it bears the burden of downbeat Australia Retail Sales, as well as mixed comments from the Reserve Bank of New Zealand (RBNZ) officials on early Friday. Also weighing on the exotic pair is the market’s risk-off mood amid looming US default fears.

Australia's Retail Sales growth dropped to 0.0% in April versus 0.2% market forecasts and 0.4% prior.

Earlier in the day, RBNZ Assistant Governor Karen Silk noted that Cyclone Gabrielle was less inflationary than first feared and stated that rates need to stay on hold for an extended period. Previously, RBNZ Deputy Governor Christian Hawkesby announced the easing of the Loan-to-Value Ratio (LVR) restrictions. Furthermore, New Zealand’s Consumer Confidence gauge slightly fell to 79.2 in May from April's 79.3, per the ANZ-Roy Morgan survey for May.

It should be noted that the RBNZ’s failure to impress the markets with 0.25% rate hike, mainly due to the unchanged peak rate forecasts, raised fears of the Reserve Bank of Australia’s (RBA) policy pivot and weigh on the Australian Dollar (AUD) in the last two days.

That said, the looming fears of the US default also allow the US Dollar to dominate. Recently, US House Speaker Kevin McCarthy announced no agreement on the debt deal, as well as the continuation of talks by saying, “It’s hard. But we’re working and we’re going to continue to work until we get this done.”

Against this backdrop, S&P500 Futures print mild losses whereas the US 10-year and two-year Treasury bond yields seesaw near the early March highs of around 3.82% and 4.54% in that order.

Looking ahead, a light calendar in the Asia-Pacific zone makes AUD/NZD vulnerable to risk catalysts.

Technical analysis

Despite repeated failure to provide a daily close beyond the 50-DMA hurdle surrounding 1.0730, the AUD/NZD pair remains on the bull’s radar as it crossed a three-week-old resistance line earlier in the week, now immediate support near 1.0690.