NZD/USD: Retail spending volumes stabilise ahead of RBNZ interest rate decision. Nov 24th 2023

Retail spending in New Zealand was unchanged in the September quarter after accounting for price movements, an improvement on the 1% drop reported in the prior three-month period than was a tenth larger than originally reported.

By :David Scutt, Market Analyst

  • New Zealand inflation-adjusted retail sales were unchanged last quarter, an improvement on the 1% decline reported for the prior three-month period
  • The data fits with the belief the RBNZ will hold rates steady at its November monetary policy decision next week
  • NZD/USD has upside momentum despite running into technical resistance this week

New Zealand real retail sales stabilise

Retail spending in New Zealand was unchanged in the September quarter after accounting for price movements, an improvement on the 1% drop reported in the prior three-month period than was a tenth larger than originally reported. The result saw the annual decline in real, inflation-adjusted spending slow from 3.9% to 3.4%, keeping the prospect of interest rates remaining steady for the foreseeable future ahead of the Reserve Bank of New Zealand’s (RBNZ) monetary policy decision scheduled for November 29.

While real retail sales stabilised, when you consider New Zealand’s population grew 3% over the past year, according to latest figures presented by Statistics New Zealand, it demonstrates how weak per-capita spending has been, hindered by the RBNZ’s decision to push monetary into restrictive territory to slow demand and bring inflation back to its annual target band of 1-3%.

RBNZ set to keep rates steady at 5.5%

Despite having a history of surprising markets, economists and markets are unified in their belief the RBNZ and its Governor Adrian Orr will play a straight bat at the November meeting, all but writing off the chance of the cash rate being adjusted from its current level of 5.5%. Looking further out, the consensus view among economists is the cash rate will remain at these levels until the third quarter of 2024 when the RBNZ is expected to begin easing monetary policy.

NZD/USD events and levels

NZD/USD was largely unmoved on the latest data, reflecting quiet market conditions for US Thanksgiving and the broader message that it does little to change the outlook for domestic interest rates, leaving offshore factors to determine which direction the currency pair moves form here.

On the daily chart, momentum remains to the upside with RSI and MACD continuing to trend higher, fitting with the price action seen over the past month. However, it is currently struggling to close above resistance at .6050, making several unsuccessful probes this week only to be hit back lower. Some traders may be reluctant to go long with the 200-day moving average located at .6094 despite price paying scant attention to the level in the recent past.

Near-term, the flash US PMI survey for November carries the potential to move NZD/USD today, as does gyrations in the JPY and CNH which have been influential on bolstering other Asian FX names this week. The likely swearing in of the new government in New Zealand is unlikely to be meaningful after moving in anticipation on Thursday.

For those considering a trade, support is located at .5995 and around .5940, coinciding with minor uptrend support and the 50-day moving average. On the topside, visible resistance is located at .6050, .6130 with very little else evident until .6385.

nzd nov 24

– Written by David Scutt

https://www.forex.com/en-us/news-and-analysis/nzd-usd-retail-spending-volumes-stabilise-ahead-of-rbnz-interest-rate-decision/

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