The kiwi dollar stood out several times, beating its commodity currency peers, but this time is different: 3 factors push NZD/USD to support against the trend, while other commodity currencies show their strength.
- Weal retail sales: This figure is published only on a quarterly basis in New Zealand, and the result was disappointing: a rise of only 1.2% against 1.4% expected. In addition, this came on top of a downwards revision for Q3: a rise of 1.5% against 1.6% originally reported. Core sales rose than expected, but it plays second fiddle to the headline figure.
- Inflation expectations lowest since 1994: With CPI released also only on a quarterly basis, the publication of inflation expectations also has an impact: this fell to an annualized level of 1.6% in Q4 after 1.9% beforehand, and in general, the figures used to be above 2%.
- Prime Minister comments: PM John Key expressed his surprise that the currency has not dropped more alongside the lower dairy prices. He also added that it’s something for the governor to keep an eye on. Is he hinting about future intervention or a rate cut by the RBNZ?
The mix of these 3 events took its toll. While the mood is good enough to keep the pair above support at 0.6580, the pair is on its back foot, battling 0.66.
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