Higher NZ Retail Sales May Not Please NZD/USD

Even though New Zealand Retail Sales were worse than expected, the NZD/USD pair barely changed. After being flat in Tokyo, the NZD/USD fell below 0.6260. Retail sales in New Zealand for the third quarter came in at 0.4%, less than expected (0.5%) but more than reported before (-2.3%).

NZDUSD

Positive Retail Sales may help the NZD, but they won’t make the RBNZ happy. The central bank is fighting against rising prices. Inflation went up a lot in the third quarter, but if consumer demand goes down, it could go down again.

Even if retail sales increase, manufacturers and service providers won’t freeze or lower prices. It might make RBNZ Governor Adrian Orr want to keep tight policies.

The RBNZ raised the OCR by 75 basis points (bps), and the new OCR is 4.25 per cent. As long as there are no signs that price pressures will stop or reach a peak, the “extremely hawkish” stance will stay. The RBNZ thinks interest rates will reach their highest point of 5.5% in September 2023.
Due to the Thanksgiving holiday, the US dollar index (DXY) is not moving much on Thursday. The risk profile is still good, and there haven’t been any warning signs.

Conclusion

The Bird is in full flight, and bulls were moving higher in Asian trade, even though bulls had lost ground since central bank events in the week.

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