NZD/USD prediction after strong New Zealand retail sales

By: Crispus Nyaga
Crispus Nyaga
Crispus is an active trader, where he is followed and copied at Capital.com. He lives in Nairobi with his… read more.
on Dec 10, 2021
  • The NZD/USD pair rose slightly after New Zealand retail sales data.
  • The country’s electronic sales numbers rose by 9.6% in November.
  • Focus shifts to the upcoming US inflation data.

The NZD/USD pair tilted higher after the latest New Zealand electronic retail sales and ahead of the upcoming American inflation data. The pair is trading at 0.6800, which is a few points above this week’s low at 0.6735.

New Zealand retail sales

The New Zealand economy has done relatively well in the past few months. Recent data shows that the country’s unemployment rate has declined to about 3.4%. Similarly, business activity has rebounded after the country ended its lockdowns.

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On Friday, data by Statistics New Zealand showed that the country’s electronic card retail sales rose to 2.9% in November. This was a better performance since these sales declined by 7.6% in the previous month. On a year-on-year basis, the country’s sales rose by 9.6% in November.

Retail sales numbers are an important part of New Zealand’s economy. For one, retailers employ a substantial share of the country’s population. Additionally, they are good measures of consumer spending, which is the biggest part of the economy. 

Therefore, these numbers mean that the Reserve Bank of New Zealand (RBNZ) will maintain a hawkish tone when it meets next. Its next meeting will happen in February. In its past decision, the bank decided to hike interest rates for the second straight month. This made it the most hawkish central bank in the developed countries.

The NZD/USD price will next react to the latest US inflation numbers. According to Investing.com, economists expect the data to show that the headline Consumer Price Index (CPI) rose from 6.2% to 6.8% in November. 

The core CPI, which excludes volatile food and energy prices, is expected to have risen from 4.6% to 4.9%. These numbers will have an influence on what the Fed will do next week.

NZD/USD forecast

NZD/USD

The New Zealand dollar has crashed by more than 5.8% from October despite the hawkish RBNZ. This decline happened because future rate hikes by the RBNZ have already been priced in by the market.

On the four-hour chart, the NZD/USD pair is trading at 0.6800, which is a few points above this week’s low at 0.6737. The pair is at the same level as the 25-day and 50-day moving averages. It is also slightly below the important support level at 0.6860, which was the lowest level in September.

Therefore, the pair will maintain a bearish trend in the next few days ahead of the Federal Reserve decision.

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