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Overview of quarterly retail sales

Early Monday in Asia, at 21:45 GMT Sunday elsewhere, sees the quarterly retail sales data from the Statistics New Zealand. As the Reserve Bank of New Zealand’s (RBNZ) Governor Adrian Orr recently conveyed concerns for globally increasing coronavirus (COVID-19) cases, while also declining negative rates, today’s New Zealand (NZ) Retail Sales for the third quarter (Q3) becomes the key to watch especially ahead of Orr’s next speech, on Wednesday.

With the recently announced Credit Card Spending being on the upside, chances of a strong print from the headline economics can’t be denied. Even so, the QoQ forecasts indicate bearish signals with the Retail Sales likely declining -15.9% versus -14.6%. However, the Core Retail Sales might have improved, as per the market consensus, from -13.7% to -12.6% QoQ in the Q3.

Analysts at the Australia and New Zealand Banking Group (ANZ) expect a sharp bounce in the data,

New Zealand retail sales kick off the Q3 GDP partials season. ANZ is expecting 16.5% q/q in a sharp bounce-back from Q2’s lockdown retail carnage. We also have Australia’s PMIs.

Westpac also follows the suit while saying,

Westpac expects that Q3 real retail sales will rebound 17% and retrace most of the ground lost in the June quarter.

How could it affect NZD/USD?

NZD/USD wavers around the highest in two years while flirting with the December 2018 top of 0.6971 off-late. The RBNZ’s clear no to the negative rates and New Zealand’s ability to overcome the pandemic, comparatively stronger than the rest of the world, can gain additional support from today’s Retail Sales data and help the Kiwi pair to attack the 0.7000 round-figure. However, too much of the New Zealand dollar strength is negative for the export-oriented economy and hence bulls may remain cautious even in case of too good data if any. Meanwhile, a negative surprise can be the much-awaited hint for the short-term sellers’ entries.

Technically, unless declining back below the 0.6800 mark, comprising multiple highs flashed during the mid-2019 and September 2020, bulls are likely to keep the reins. In doing so, the 0.7000 psychological magnet can become their immediate target. However, a downside break of 10-day SMA, currently near 0.6880 can trigger intraday selling.

About New Zealand Retail Sales

The Retail Sales released by the Statistics New Zealand measures the total receipts of retail stores. Quarterly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. A high reading is seen as positive (or bullish) for the NZD, while a low reading is seen as negative (or bearish).

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