NZD/USD seesaws around 0.6900 despite strong New Zealand Q2 Retail Sales
- NZD/USD fails to cheer upbeat New Zealand Retail Sales figures, edges higher of late.
- New Zealand Q2 Retail Sales jump 3.3% QoQ versus 2.0% forecast.
- NZ PM Ardern warns of further hike in cases, Finance Minister Robertson cools down economic fears from Delta outbreak, lockdowns.
- Upbeat market sentiment, backed by vaccine optimism and hopes of longer easy money policies, keeps buyers hopeful.
NZD/USD struggles to extend the heaviest daily gains in six weeks beyond 0.6900 during Tuesday’s Asian session. In doing so, the Kiwi pair fails to benefit from the second quarter (Q2) Retail Sales data from New Zealand, as well as mildly bid stock futures. The reason could be linked to downbeat comments from NZ Prime Minister Jacinda Ardern.
NZ Q2 Retail Sales rose past 2.0% market consensus and 2.5% previous readouts to 3.3%. Ahead of the release, the Australia and New Zealand Banking Group (ANZ) said, “This is the first partial indicator for Q2 GDP, which given recent Alert Level changes now feels like old news. We’ve penciled in a 1.5% q/q rise, and note some indicators point to upside risk.”
Read: New Zealand Retail Sales beat expectations, NZD/USD supported at 0.6890
“Prime Minister Ardern is warning to expect the number of Covid cases to rise again today as the highly contagious Delta variant continues to spread through households and the community,” said New Zealand Herald. The news also mentions 35 new cases taking a total of 107.
Alternatively, “Finance Minister Grant Robertson told the Finance and Expenditure Committee that the economy was well-positioned to deal with the Delta outbreak and the lockdowns, with unemployment at 4 percent and lower than expected net debt,” per the New Zealand Herald. This keeps the economic fears away from the NZD/USD traders while the recently upbeat NZ Retail Sales figures keep them hopeful.
It’s worth noting that the downbeat readings of August PMIs from the developed nations, published on Monday, rejected the tapering concerns and favored risk-takers during the first day of the week. Also favoring the risk-on mood were the vaccine news suggesting more come and faster jabbing.
Amid these plays, US stock futures track firmer Wall Street benchmarks whereas the US 10-year Treasury yields and the US Dollar Index (DXY) remain depressed.
Although a light calendar may restrict NZD/USD moves, covid headlines will join the Taliban-related chatters and US-China tussles to keep the prices moving.
Technical analysis
NZD/USD remains on the way to March lows surrounding mid 0.6900s until declining below the 0.6800–6795 support zone comprising the latest bottom and September 2020 high.