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23/05/24
151
NZD Higher After Strong Retail Sales Data
On Thursday the New Zealand dollar was in positive territory and NZD/USD traded at about 0.6120, up 0.38% in the European session.
After Wednesday’s rate decision by the Reserve Bank of New Zealand, the New Zealand dollar gained 1% to reach a nine-week high. The New Zealand dollar could however not consolidate and gave up nearly all those gains.
New Zealand’s retail sales were 0.5% higher q/q in Q1, which was good news after declining for eight consecutive quarters. This was higher than the -0.3% market estimate. The healthy number was driven by strong increases in the purchase of recreational goods and food.
Retail sales are still in a deep hole on a yearly basis with a decline of 2.4% in the first quarter, after a 4.1% drop in Q4 of 2023. This was the sixth straight quarter of retail spending declining.
The Reserve Bank of New Zealand has kept the cash rate at 5.5% for the seventh consecutive time, sticking to its “higher for longer” rate policy. Orr noted at the follow-up press conference that inflation expectations were declining and that it would take time for inflation to drop. Orr added that Bank members had discussed hiking rates at the meeting and reiterated the policy statement.
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