NZD/USD forecast: signal after strong New Zealand economic data

on Sep 12, 2023
  • The NZD/USD exchange rate came under pressure on Tuesday.
  • New Zealand’s electronic retail sales rose by 3.7% in August.
  • The US will publish the latest consumer inflation data on Wednesday.

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The NZD/USD consolidation continued on Tuesday after the latest New Zealand retail sales numbers. The pair was trading at 0.5908, a few points above this month’s low of 0.5855. It has dropped by more than 9% from the highest level this year.

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New Zealand sales and US inflation data

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The NZD/USD exchange rate has been under pressure in the past few months as the US dollar index (DXY) surged. The greenback has soared to $105, the highest level in more than five months.

Economic data published on Tuesday showed that New Zealand’s electronic sales rose by 3.7% in August after rising by 2.2% in July. These sales rose by 0.7% from a month earlier, signaling that spending is increasing.

New Zealand also benefited from rising visitor arrivals. Visitors jumped from 11.3% in July to 19.3% in August. In the same period, the number of permanent residents dropped from 8,549 in July to 5,786.

The NZD/USD pair also wavered after the latest New Zealand economic outlook. Data by the statistics agency showed that the economy will remain sluggish for another two years. Its budget deficit will continue rising in the coming months. In a statement, the economy minister said that the country was turning a corner.

The next key catalyst for the NZD/USD price will be the upcoming US consumer inflation data. Economists expect the numbers to show that the headline consumer price index (CPI) rose from 0.2% in July to 0.6% in August. On a YoY basis, the headline inflation rose to 3.6% during the month.

Most investors will focus on core inflation, which excludes the volatile food and energy prices. Economists believe that the core CPI dropped from 4.7% to 4.3%. The US will also publish the latest retail sales numbers on Thursday. 

NZD/USD exchange rate forecast

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NZDUSD chart by TradingView

My last NZD/USD forecast three weeks ago was accurate. In it, I wrote that the pair would have a bearish breakout. It has now moved below the key support level at 0.5980, the lowest swing on May 31st. The pair has dropped below the 50-day exponential moving average and the descending trendline shown in red. 

Therefore, the pair will likely continue falling as sellers target the key support at 0.5811, the highest swing on October 7. The stop-loss of this trade will be at 0.5600.


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