NZD/USD is trading higher after strong New Zealand retail sales data. According to Statistics New Zealand, retail sales in the country surged by 2.5% in Q1’21. This is after a decline of 2.7% in 2020’s fourth quarter. On a year-on-year basis, the retail sales have risen by 6.8% compared to the prior quarter’s 4.8%.

Besides, with the exclusion of food and energy components, core retail sales were up by 3.2% compared to the prior reading of -2.9%. By industry, sales of recreational goods surged by 16% while electrical and electronic goods were up by 8.4%. In the prior release, these sectors had their retail sales fall by 14% and 0.3% respectively.

New Zealand has recorded significant economic recovery from the coronavirus pandemic. Subsequently, the government expects the economy to grow by 2.9% in 2021 and 4.4% in 2022. Besides, as part of its budget, its infrastructure spending is expected to reach N$57.3 billion. With over N$11.6 billion set to be spent in the housing sector, the country’s house-price inflation is expected to drop to 0.9%.

With the ongoing and forecasted economic recovery, NZD/USD will be reacting to the RBNZ interest rate decision scheduled for Wednesday. While the central bank is expected to leave rates unchanged, a hawkish tone is likely. This will be a bullish catalyst for the currency pair.  

On the side of the US dollar, the decline in US Treasury yields has weakened the currency. The benchmark 10-year yields have dropped by 0.73% at 1.60. It remains on a downtrend after hitting 1.69 on Thursday. The 30 and 5-year bond yields are also down by 0.90% and 1.21% respectively.

NZD/USD Technical Outlook

NZD/USD is trading higher by 0.25% at 0.7194. On a four-hour chart, it is trading between the 25 and 50-day exponential moving averages. I expect the currency pair to move higher to 0.7200. beyond that level, the bulls will be targeting 0.7250. On the flip side, it may pull back to find support at 0.7150.

Leave a Reply

Your email address will not be published. Required fields are marked *

Sign Up for Our Newsletters

Get exclusive content in your inbox.

You May Also Like

GBP/USD Forecast with BoE Interest Rate Decision on the Horizon

GBP/USD is seesawing along 1.3800 ahead of the BoE interest rate decision. It is likely to be range-bound between 1.3800 and 1.3900 ahead of the event.

EUR/USD Forecast Ahead of US Inflation and Retail Sales Data

The EUR/USD pair surged on Friday after the disappointing US non-farm payrolls (NFP) data. The US will publish the latest inflation and retail sales data.

GBP/USD Forecast Ahead of the UK Retail Sales

GBP/USD has eased on its decline ahead of the UK retail sales data. The data comes at a time when UK government postponed reopening by a month.

EUR/USD In The Red Ahead of Jobless Claims

The EUR/USD pair has been on a bearish consolidation for the past few days. According to data published on Wednesday, eurozone inflation improved in July.