NZD / USD falls below 0.7150 again, despite recovery in New Zealand consumer spending

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  • NZD / USD is pulling back and has now stabilized below 0.7150.
  • The pair was unable to get support from evidence that New Zealand consumer spending is recovering in the fourth quarter.

The NZD / USD it continues to trade on a negative bias and is currently down around 0.3% on the day and is trading below 0.7150, having briefly challenged Monday’s highs at 0.7170 during the Asian session on Tuesday. Kiwi’s weakness comes despite data showing a strong rebound in consumer spending in New Zealand in October.

It remains to be seen whether the modest pullback from the weekly highs seen Tuesday will translate into a more significant turnaround following the recent rally from the 200-day moving average at 0.7100. For now, currency markets are happy to trade within recent ranges and moderately as market participants expect new macrocatalysts, of which the consumer price inflation (CPI) report on Wednesday October could be one.

Ahead of Wednesday’s US CPI report, the October Producer Price Inflation (PPI) report was released recently. The major and major year-on-year and monthly metrics were broadly in line with expectations, so there has been no notable market reaction, but all held at historically high levels, suggesting that Wednesday’s CPI report will show the same. . However, US markets seem more focused on who US President Joe Biden will elect as the next Fed chairman at this point. US real and nominal yields fell on Tuesday and some attribute the drop to reports that Fed Governor Lael Brainard (seen as more dovish than incumbent President Jerome Powell) was interviewed for the position and is seen as a contender. His nomination would weigh on the US dollar.

New Zealand consumer spending recovers as lockdowns ease

Economic data released overnight showed the impact of the New Zealand closings in the third quarter diminished at the beginning of the fourth quarter; October electronic card retail sales increased 10.1% month-on-month. That means retail sales have now recovered about half of the nearly 20% month-on-month drop seen in August, when the lockdowns first took effect across the country. With Auckland set to come out of the lockdown at the end of the month when vaccination rates hit key thresholds, retail sales are expected to continue to rally through the remainder of the fourth quarter.



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