Overview of quarterly retail sales
Early Friday morning in Asia, 22:45 GMT on Thursday, the market sees the quarterly retail sales data from the Statistics New Zealand.
Although the first quarter (Q1) retail sales figures are less likely to offer much entertainment considering the survey period comprising only initial lockdown days, the numbers will have their influence on the kiwi pair.
While the recently announced Electronic Card Retail Sales flashed disappointing figures, down -47.5% YoY in April versus -1.8% prior, the headline Retail Sales might differ from +0.7% previous due to the survey period. That said, the Retail Sales ex-Autos grew 0.5% during the last quarter (Q4) of 2019 on a QoQ basis.
TD Securities emphasize on the Q2 data while expecting fall in the Q1 figures while saying,
"Q1 Real Retail Sales are likely to have dropped, we see the decline over Q2 is likely to be larger. We expect real retail sales to have dropped 1% in the quarter."
Additionally, Westpac said,
Q1 real retail sales are due. Spending levels were broadly flat in January and February ahead of a decline late in the quarter. On balance, Westpac is looking for a 1.6% fall over the three months to March. Given that lockdown conditions only came into effect in late March, spending will be much weaker in the June quarter.
How could it affect NZD/USD?
The NZD/USD pair currently trades around 0.6120 amid the early Asian session on Friday. In doing so, the kiwi pair remains pressured below the monthly top flashed Wednesday.
Amid all odds due to the coronavirus (COVID-19), the New Zealand economy managed to outshine its global counterparts and enabled the RBNZ to defy negative rates. Though, New Zealand’s central bank stays ready to use unconventional monetary policy tools, including the expansion of Quantitative Easing (QE). As a result, disappointing figures even before the harsh lockdown could push the RBNZ towards rethinking on their hawkish bias, which in turn could weigh on the pair. On the contrary, upbeat figures will offer additional strength to the bulls in questioning 100-day EMA resistance.
Technically, NZD/USD has been gradually building upside momentum since early-April but has so far failed to cross 100-day EMA, currently around 0.6175, on a daily closing basis. In addition to the 100-day EMA, the resistance line of a short-term rising channel, at 0.6205, also checks the bulls. Meanwhile, 50-day EMA near 0.6080 can offer nearby support during the pair’s U-turn ahead of 0.6000 round-figure. However, a major downside isn’t expected unless the quote breaks channel formation by slipping beneath the 0.5930 support.
Key Notes
NZD/USD reversal from 0.6150 finds support at 0.6100
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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