New Zealand Dollar Rises on Upbeat Retail Sales Figures

Talking Points:

• NZ Retail Sales Excluding Inflation at 1.2% Q/Q for 2Q vs. 1.0% Expected, 0.8% in 1Q
• New Zealand Dollar Rises as Better-Than-Expected Figure Fuels Policy Expectations
• Currency Strategist Ilya Spivak Sees Immediate NZD/USD Resistance Level at 0.8509

The New Zealand Dollar rose after the country reported better than expected retail sales figures for the second quarter of 2014. The release, which is reported excluding the effects of inflation in the economy, showed an increase of 1.2 percent in retail sales, printing higher than the anticipated 1.0 percent and last quarter’s revised figure of 0.8 percent.

The New Zealand Dollar traded higher likely because the data reflected a strong consumer sentiment in New Zealand, fueling expectations that the Reserve Bank of New Zealand might resume raising interest rates after it signaled a pause earlier in July. It is interesting to note is that despite better rate expectations, New Zealand’s 10 year government bond yield fell sharply. This happened probably because the New Zealand Dollar remains an attractive choice for carry trades as the RBNZ has the highest interest rate among major central banks at 3.5 percent, and the upbeat retail sales figure likely fueled demand for country’s bonds.

For traders out there who enjoy trading using technical strategies, Currency Strategist Ilya Spivak sees a break at 0.8472 levels possibly challenge the Fibonacci retracement at the 0.8509. However, he remains unsatisfied with the trading range of the NZD/USD and recommends waiting for more eye-catching trades to show up. Currently, 82 percent of FXCM retail traders are long on the currency pair, according to DailyFX’s Speculator Sentiment Tool.

NZDUSD [15 mins – 08/13/2014] Chart created using FXCM Marketscope