Daily Currency Update

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Strong Retail Sales not enough to push Kiwi through resistance

NZD - New Zealand Dollar

The New Zealand dollar edged upward through trade on Tuesday, buoyed by stronger than anticipated domestic retail sales data. While broader markets remained largely muted the Kiwi crept toward the top end of recent ranges and resistance at 0.6431 following strong gains in consumer spending across both general retail items and core consumer goods. Retail sales advanced 1.6% in q3 with annualised real growth advancing 4.5%, a veritable boom and death knell for economic naysayers. That said a deep dive into data shows margins continue to be squeezed, hampering profitability, dampening optimism across retailers and undercutting upside gains. As such, the market and investors appeared reluctant to extend kiwi upside refusing to push short term bounds beyond the current resistance handles.

Strength across domestic macroeconomic indicators and stability across monetary policy expectations have helped the NZD bounce of lows and find support at or near the 0.64 handle. With little volatility in play across broader currency markets further upside gains have stalled as resistance on approach to 0.6430 and 0.6450 holds. Attentions today turn to the RBNZ financial stability report, trade balance data and commentary for RBNZ governor Orr. In the absence of any significant shocks form today’s data sets we expect the NZD to remain range bound and bounce between 0.6380 and 0.6450.

Key Movers

Broader currency markets were largely muted through trade on Tuesday as trade new headlines have little impact in the absence of any concrete evidence a deal will be struck while broader macroeconomic indicators remain steady and monetary policy movements globally appear to have stalled as central banks assess recent moves and their relative impact.

US consumer confidence data was weaker overnight , falling for the fourth consecutive month, while New home sales data was strong as low interest rates and a strengthening labour market bolstered buyer confidences. The US found further support in a surprise narrowing of the trade deficit (although some what skewed by timing of tariffs) leading to increased expectations for Q4 growth and a period of stability across Fed interest rates.

Sterling remains vulnerable to polling news ahead of the election falling as labour seemingly narrows the gap to the ruling conservatives. Down 0.3% Sterling opens at 1.2863.

Expected Ranges

NZD/USD: 0.6380 - 0.6450 ▲

NZD/EUR: 0.5800 - 0.5860 ▼

GBP/NZD: 1.9910 - 2.0130 ▼

NZD/AUD: 0.9410 - 0.9530 ▲

NZD/CAD: 0.8490 - 0.8560 ▼