The NZD/USD pair declined slightly even after the relatively strong New Zealand retail sales numbers. It dropped to 0.6980, which was slightly below Friday’s high of 0.700.
New Zealand recovery
The New Zealand economic recovery is accelerating, according to the latest data by the statistics agency. The numbers showed that electronic sales rose by 0.9% in June after rising by 1.7% in the previous month. This increase led to a year-on-year increase of 4.0%. The sales had risen by 18.1% on a year-on-year basis because of last year’s low base.
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According to the statistics agency, the increase was mostly because of consumables, which rose by 1.8% to N$41 million. Consumables were followed by non-retail sales, fuel, and durables. Their increase was partially offset by a sharp drop in apparel sales. In total, the country’s retail spending increased by N$989 million.
Other recent data from New Zealand have been relatively positive, pushing more investors to price-in a hawkish Federal Reserve. For example, recent data showed that the number of townhouses and flats consented in May surged to 1,380, the highest level since 1990.
The New Zealand Institute of Economic Research (NZIER) data revealed that business confidence moved to the positive zone in June. A net of 7% of firms expects economic conditions to improve, a sharp rebound from the previous month’s -13%. The improvement is mostly because of the ongoing reopening that has led to more local and international demand. As such, data compiled by Reuters show that the Reserve Bank of New Zealand (RBNZ) will likely hike rates in November.
The NZD/USD will react to the latest US inflation and retail sales numbers scheduled for Tuesday and Friday this week. Other important numbers will be the US initial jobless claims, bank earnings, and manufacturing earnings.
NZD/USD technical analysis
The NZD/USD is trading at 0.6980, which is between the support and resistance levels at 0.6922 and 0.7095. On the four-hour chart, the pair is a few pips below the 25-day and 50-day moving averages. It has also formed an M pattern that is usually a bearish sign.
At the same time, the pair has formed a Gartley (XABCD) pattern, which is usually a bullish sign. Therefore, the pair will likely remain at this point in the immediate short term. The key support and resistance levels will be 0.6920 and 0.7050.
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