NZD/USD: NZ Dollar Higher Despite Weak Retail Sales
2024.08.23 11:45
The New Zealand dollar is in positive territory on Friday. Early in the North American session, is trading at 0.6158 at the time of writing, up 0.28% on the day. The New Zealand dollar continues to look sharp and has climbed 1.7% this week against the retreating .
New Zealand Retail Sales Expected to Slide
New Zealand’s retail sales showed a sharp decline in the second quarter. Retail sales slipped 1.2% q/q, compared to a revised 0.4% gain in Q1 and shy of the market estimate of -1%. Annually, retail sales plunged 3.6% in the second quarter, down from -2.4% in Q1.
Consumers aren’t spending and that is bad news indeed for the economy. The Reserve Bank of New Zealand has projected that the economy declined 0.5% in the second quarter and will contract by 0.2% n Q3. If the economy contracted in both the second and third quarters, it would mark the third recession in less than two years.
The RBNZ abruptly shifted its rate policy last week, cutting rates by a quarter-point and projecting further cuts now that inflation has eased. In May, the central bank warned that rates might have to increase, and the zigzag could put the Bank’s credibility at risk.
Will Powell’s Speech Shake Up the Markets?
The annual Jackson Hole meeting has kicked off and all eyes are on the host, Federal Reserve Chair Jerome Powell. The markets will be listening closely, hoping for some insights into the Fed’s rate plans.
There is little doubt that the Fed will cut at the Sept. 18 meeting, most likely by a quarter point. What happens after that is less clear and Powell’s take on the strength of the US economy could shed some light on that question.
There’s a strong chance that the Fed will deliver additional cuts before the end of the year, but recent employment data has been very weak and that could delay further rate cuts. This means that the next employment report on Sept. 6 will be a key factor in determining the Fed’s rate path.
NZD/USD Technical
- NZD/USD tested resistance at 0.6147 earlier. Above, there is resistance at 0.6191
- 0.6122 and 0.6103 are the next support levels
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