The New Zealand dollar has edged lower on Friday. In the European session, NZD/USD is trading at 0.6244, down 0.33%.

Retail sales post modest gain

It wasn’t a spectacular rebound by any means, but New Zealand’s retail sales showed a gain in Q3. Headline and core retail sales both rose a modest 0.4% QoQ. This follows a soft Q2, when headline retail sales came in at -2.2% and the core release at -1.5%. The reaction of NZD/USD was subdued, likely a result of the Thanksgiving holiday, with US markets open for limited hours today.

Retail sales data may not be as positive in Q4, with the Reserve Bank of New Zealand hiking rates by a massive 0.75% this week. The RBNZ has signalled that household spending will have to drop in order to curb inflation, and with more rate hikes still to come, it’s clear that household spending will come down during the current rate-hike cycle.

The Federal Reserve has telegraphed to the markets that it will continue to raise rates, despite the last inflation report, which was softer than expected. The Fed’s message, reiterated in this week’s minutes, remains somewhat mixed. On the one hand, the Fed has said that the pace of rates will be easing shortly, and the markets have priced in a ‘modest’ 50 bp hike in December after four consecutive 75-bp increases. At the same time, some Fed members are projecting that the terminal rate will be higher than previously expected. There is uncertainty as to whether this “lower for longer” stance is bullish or bearish for the US dollar, a question we’ll have to wait for market participants to answer.

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NZD/USD Technical

• NZD/USD faces resistance at 0.6283 and 0.6361
• There is support at 0.6217 and 0.6139

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.

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.

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• Source: https://www.marketpulse.com/20221125/nzd-usd-down-despite-rise-in-retail-sales/