Quarterly retail sales overview
Early Friday morning in Asia, at 10:45 GMT Thursday, the market sees quarterly retail sales data from Statistics New Zealand.
While first quarter (Q1) retail sales figures are less likely to offer a lot of entertainment given the survey period that includes only the first days of foreclosure, the figures will have their influence on the pair of kiwis.
While recently announced retail sales of electronic cards posted disappointing numbers, down -47.5% year-on-year in April from -1.8% previously, title retail sales could differ by + 0, 7% due to the investigation period. That said, ex-auto retail sales increased 0.5% in the last quarter (Q4) of 2019 on a QoQ basis.
TD Securities focuses on Q2 data while expecting Q1 numbers to drop by saying:
“Actual retail sales in the first quarter are likely to have declined, we believe the decrease from the second quarter should be more significant. We expect actual retail sales to have decreased by 1% in the quarter.”
In addition, Westpac stated:
Actual first quarter retail sales are expected. Spending levels remained broadly stable in January and February, before declining at the end of the quarter. Overall, Westpac expects a 1.6% drop over the three months ending in March. Since the lock-in conditions did not take effect until the end of March, spending will be much lower in the June quarter.
How could this affect NZD / USD?
NZD / USD is currently trading around 0.6120 at the start of Friday’s Asian session. In doing so, the pair of kiwis remains under pressure below the monthly peak flashed on Wednesday.
In the midst of all the odds from the coronavirus (COVID-19), the New Zealand economy managed to outshine its global counterparts and allowed the RBNZ to challenge negative rates. However, the New Zealand central bank remains ready to use unconventional monetary policy tools, including the expansion of Quantitative Easing (QE). As a result, disappointing numbers even before the severe foreclosure could push the RBNZ to rethink its hawkish bias, which in turn could weigh on the pair. On the contrary, the optimistic figures will offer additional strength to the bulls to question the resistance to 100 days in the EMA.
Technically, the NZD / USD has progressively progressed since early April, but has so far failed to break through the 100-day EMA, currently around 0.6175, on a daily close basis. In addition to the 100-day EMA, the resistance line of a short-term bullish channel, at 0.6205, also controls the bullish. Meanwhile, the 50-day EMA near 0.6080 can offer close support during the pair’s U-turn before 0.6000 on the round digit. However, a major drawback is not expected unless the listing breaks the formation of channels by sliding under the 0.5930 support.
NZD / USD reversal of 0.6150 finds support at 0.6100
About retail sales in New Zealand
Retail sales published by Statistics New Zealand measure total retail store revenue. The quarterly percentage changes reflect the rate of change of these sales. The evolution of retail sales is widely followed as an indicator of consumer spending. A high reading is considered positive (or bullish) for the NZD, while a low reading is considered negative (or bearish).