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Retail sales in New Zealand are likely to have eased back slightly in May, rocketing gasoline prices discouraging buyers is causing a depression. Besides this issue, however, retail sales are expected to recover 0.5 percent, as higher energy and food prices draw up the index reading. However, spending on optional items like outfits and furniture could be weak, as credit card expenses in the country – which was a good leading sign of retail sales over the past few months – slowed down to an yearly rate of 5.9 percent from 8.2 percent. If retail expenditure in New Zealand delays, the action will be at the same level as the Reserve Bank of New Zealand’s plans, as they have left rates stable at a record high of 8.25 percent regardless of the detail the economy contracted during the first quarter. While the RBNZ without doubt remains worried about inflation pressures, the financial policy announcement from their June meeting said that they were “likely to be in a position to lower the OCR later this year, which is quicker than formerly expected.” Therefore, it would take an tremendously strong retail sales report to move expectations that the RBNZ will cut rates this year.
Bonds – 10-Year New Zealand Government Bond Yields:
New Zealand’s government bond yields have gradually went down since breaking below support at 6.3 percent, and future measures, the release of retail sales could shake up bonds, particularly if the data shows shocking results. An unsatisfactory spending number will lift the risk that the RBNZ will think about rate cuts this year and lead yields toward 6.0 percent, while a better-than-expected figure could help push yields toward 6.2 percent once again.
FX – NZD/USD:
The NZD/USD has come stressed after peaking to a multi-decade high of 0.8200 in March. Market members expect economic movement to slow more as the RBNZ keep on holding the benchmark interest at the record high of 8.25 percent, which could repair bearish sentiment among traders once more. The retail sales release has been acknowledged to be a market-mover for the NZD/USD when the data is surprising, and could push the currency pair higher towards the upper bound if the release comes out as anticipated. However, a fall in retail sales possibly will increase selling pressures for the New Zealand dollar, and might direct the pair back down toward near-term support of 0.7500.
23:28
Posted on Jul-13-2008
