Australia, NZ dollars subdued as data disappoint

By Wayne Cole

SYDNEY, May 30 (Reuters) - The Australian and New Zealand dollars were headed on Friday for a subdued end to the week as domestic economic news proved disappointing, while chaos in U.S. tariff policy kept risk appetite restrained.

The Aussie took a knock when data showed retail sales fell 0.1% in April, when analysts had hoped for a 0.3% increase. Weather played some part, and will again this month as weeks of rain and widespread flooding hit New South Wales, Australia's most populous state.

Downgrades to the consumption outlook were a major reason the Reserve Bank of Australia cut rates a quarter point to 3.80% last week, and why markets are wagering on another move as soon as July.

"The key question from today's data is whether the profile of a pick-up in household consumption is again in danger of being revised down and pushed out," noted Tapas Strickland, head of market economics at NAB.

Futures imply around a 60% chance the RBA will ease at its next meeting on July 8, though most analysts assume it will want to wait for second-quarter inflation data due later in the month before deciding on a move in August. 0#AUDIRPR

Futures have priced in three more cuts to take rates to a floor of 3.10%, which is roughly where policy would be considered neutral for the economy.

The retail sales miss was enough to nudge the Aussie down 0.3% to $0.6424 AUD=D3, leaving it almost 0.9% lower for the week so far. Support lies around $0.6408 and $0.6358, with resistance up at the recent top of $0.6537.

The kiwi dollar was down 0.3% for the week at $0.5965 NZD=D3, though it had bounced from a low of $0.5926 overnight. It remains well within the $0.5847 to $0.6031 range of the past month.

The kiwi had got a brief boost this week when the Reserve Bank of New Zealand cut rates to 3.25% as expected, but sounded in no hurry to ease again.

That saw markets pull up the expected floor for rates to 3.0% from 2.75%, and push out the timing of any cut. A move in July is now put at just 33%, with August around 70% and October near 100%. 0#NZDIPR

Bond markets were jolted out of dovish positions, sending two-year swap rates up 16 basis points for the week to 3.285% NZDSM3NB2Y=.