NZD/USD: Trading the NZ Retail Sales August 2013

New Zealand  Retail Sales is considered one of the most important indicators of consumer spending. A such, it  is often a  market-mover and can affect the direction of NZD/USD. A reading that is higher than the market forecast is bullish for the  New Zealand  dollar.

Here are all the details, and 5 possible outcomes for NZD/USD.

Published on Tuesday at 22:45 GMT.

 Indicator Background

Consumer spending is one of the most important components of the economy, and strong numbers in this sector signify growth and a stronger economy. Traders  should note that New Zealand Retail Sales is released each quarter, magnifying the impact of each release.

The Q2 release was a disappointment, dropping to a gain of 0.5%. This fell short of the estimate of 0.9%. The markets are expecting a stronger reading in Q3, with a forecast of a strong gain of 1.4%. Will the indicator beat this rosy prediction?

Sentiments and levels

The New Zealand dollar has posted sharp gains in the past week, climbing about 250 points against the retreating US dollar. The kiwi has kept pace with the Australian dollar, which has also moved higher against the greenback during this time. Recent Trade Balance numbers were excellent, and consumer and business confidence indicators have been positive. So, the overall sentiment is bullish on NZD/USD towards this release.

Technical levels, from top to bottom: 0.8255, 0.8172, 0.8088, 0.8000,  0.7920 and 0.7650.

5 Scenarios

1. Within expectations: 1.1% to 1.7%: In such a case, the  kiwi is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 1.8% to 2.2%: An unexpected higher reading can send NZD/USD above one resistance line.
3. Well above expectations: Above 2.2%: Such an outcome would propel the pair upwards, and a second resistance line might be broken as a result.
4. Below expectations: 0.6% to 1.0%: A  weak reading could push NZD/USD below one level of support.
5. Well below expectations: Below 0.6%: In this scenario, the  pair could break a second support level.

For more about the New Zealand dollar, see the  NZD to USD forecast.

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