Weak retail sales cool off NZ Dollar

The New Zealand dollar has posted small gains in the Tuesday session. Currently, NZD/USD is trading at 0.7313, down 0.22% on the day.

Retail Sales slide

The New Zealand economy has looked strong, with most key indicators pointing upwards. However, investors were in for a rude surprise on Tuesday, as retail sales reports for Q4 in 2020 showed a much sharper contraction than anticipated. Headline retail sales came in at -2.7% and the core reading at -3.1%. The street consensus stood at -0.5% and -0.6%, respectively. However, on a year-to-year basis, Q4 retail sales were actually up by 4.8%. Investors were not too concerned about the declines, as the New Zealand dollar has been in positive territory for most of the day. Earlier in the day, NZD/USD touched a high of 0.7341, its highest level since April 2018.

 

RBNZ rate decision next

The RBNZ holds its monthly policy meeting on Wednesday and will release a rate statement (1:00 GMT). The central bank is expected to keep interest rates at 0.25%, where they have been pegged since March. This week’s S&P upgrade of New Zealand’s sovereign rating to AA+ from AA has impressed investors and given a boost to the sizzling New Zealand dollar. The upgrade is also good news for the RBNZ, which will allow it to attract new international investors as it continues to purchase government bonds. The S&P note announcing the rating upgrade praised New Zealand for its successful containment of Covid-19 and said this was a major reason for the strong economic recovery. At the same time, S&P did mention two areas of concern in the New Zealand economy – a possible weakening of the housing market and high household debt.

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NZD/USD Technical

NZD/USD remains range-bound for a third straight day.

  • NZD/USD continues to put pressure on resistance at 0.7355. This is followed by resistance at 0.7414
  • There is support at 0.7198. Below, we find support at 0.7100
  • The 50-day moving average (MA) is situated at 0.7184

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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