Open an Account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open an Account
✖

New Zealand consumers are not helping out NZD/USD as it trades at 3-month lows

February 27, 2023 3:18 PM

New Zealand released its Q4 2022 Retail Sales data early on Monday.  The actual print was -0.6% vs an expectation of +1.7% and a Q3 print of +0.6%.  A large part of the drop was goods produced in manufacturing and electronics.  However, there was a large pickup in the services sector, with food and beverages up double digits! This was largely due to the reopening of international travel, in which New Zealand saw strong demand for accommodations (+28%).  But remember, this print is for Q4 2022, which was a long time ago.  Have things changed since then?  Recall that Cyclone Gabrielle recently came through the region causing heavy damage and flooding to some areas.  Will these areas see a pickup in spending as they rebuild?  This may pump up retail sales in Q1 2023. 

The RBNZ doesn’t meet again until April 4th.  However, recall from the February 22nd meeting that the central bank hiked by 50bps to raise the OCR to 4.75%.  The Committee saw additional increases in rates in the months ahead. Can the RBNZ keep economic growth down as parts of New Zealand rebuild after the cyclone? 

On a daily timeframe, NZD/USD has been trading within a range since November 30th, 2022.  Some may look at this as a double or triple top.  Regardless, the target is the same: the height of the pattern added to the breakdown point.  In this case, the target is near 0.5865.  NZD/USD traded between 0.6360 and 0.6538 from November 30th, 2022, until February 24th.  The pair not only broke below the bottom of the range, but also broke the 200 Day Moving Average near 0.6180.  On Monday, NZD/USD also broke below the 38.2% Fibonacci retracement from the lows of October 13th, 2022, to the highs of February 2nd at 0.6146.

Source: Tradingview, Stone X

The first support level is at the lows from November 17th, 2022, at 0.6061.  Below there, price can move to the 50% retracement level from the above-mentioned timeframe at 0.6022, then the psychological round number support level of 0.6000.  However, if this proves to be a false breakdown and NZD/USD moves back into the range, the first resistance is at Friday’s high of 0.6244.  Above there, price can move to horizontal resistance at 0.6304, then the 50 Day Moving Average at 0.6341.

One has to question whether the weak Q4 data will hurt the Kiwi going forward.  With rebuilding, more spending, and higher inflation expected, some may think it won’t.  However, the next RBNZ meeting isn’t until April 4th.  The Committee will have plenty more data to look at before it decides what to do with interest rates!

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.

© FOREX.COM 2024