NZD/USD soars after record New Zealand retail sales data

Written by: Crispus Nyaga
November 23, 2020
  • The NZD/USD pair rose to the highest level since 2018 after the strong New Zealand retail sales data.
  • The overall retail sales rose by 7.4% in the third quarter after dropping by 14.8% in Q2.
  • The pair also rose because of the overall weaker dollar as countries plan their vaccination plans.

The NZD/USD price rose to the highest level since December 2018 after the strong New Zealand retail sales and the overall weaker US dollar. The pair is trading at 0.6915, which is ~27% higher than this year’s low of 0.5472.

NZD/USD rises to 2018 highs

New Zealand retail sales rise

New Zealand has been one of the best-performing country in terms of its Covid response. The country, which is home to more than 5 million people has only recorded just 2,030 cases and 25 deaths. This month alone, the country has confirmed less than 20 new cases.

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The results of this performance are showing in its economic performance. According to Statistics New Zealand, the country’s retail sales surged to a record high in the third quarter. In total, sales rose by 7.4% to n$1.8 billion boosted by high spending on household items, automobiles, and groceries. In the past 12 months to October, the sales fell by just 0.2% to $97.6 billion.

The growth was spread across the country, with retail sales in Auckland rising by 3.6% to $315 million. In Canterbury, sales rose by 9.3% to $280 million.

By sectors, the automobile and parts industry had the biggest increase in the third quarter. The sales rose by 13% followed by food and liquor stores, which also recorded a strong performance.

A robust building industry also led to strong sales in the hardware, building, and garden supplies data. The bureau said:

“While the year-on-year spending is encouraging for most industries, the hospitality sector is still suffering the economic impacts of border restrictions and a further lockdown period imposed on the Auckland region for part of this quarter.”

The NZD/USD is also rising because of the relatively weaker US dollar. The dollar index (DXY), which measures the strength of the greenback, has dropped by more than 0.15%. That is mostly because of a risk-on sentiment as investors abandon the dollar because of the upcoming vaccine season. Media reports suggest that countries like the US and UK are planning to start vaccinations in the coming month.

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NZD/USD technical overview

NZD/USD technical chart

On the daily chart, we see that the NZD/USD has risen substantially recently. Early this month, the pair managed to move above the resistance level at 0.6792, which was its highest level in July and September. It also exited the ascending triangle pattern, which is usually bullish, as you can see in our free forex trading courses.

The pair is above the 15-day and 25-day moving averages while the Average Directional Index (ADX) has moved to 33, which is usually a sign that the trend will continue. Therefore, the pair will continue rising, with the next resistance level to watch being 0.700.