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NZD loses footing over US Retail Numbers

10.37 NZST, Wednesday 15 August 2012

NZD loses footing over US Retail Numbers

By Andrew May (Sales Trader, CMC Markets New Zealand)

The NZD has enjoyed being well supported over US 81c for the majority of August. It has only been since Monday that it has lost some ground in the ensuing 'risk vs safe-haven Greenback 'turf war'.

In late trade this morning, the robust Kiwi was holding firm support at 0.8080c however lost around 30pts to retest late July levels after the world’s largest economy (despite the worst drought conditions in 50 years) recorded strong advance retail sales of 0.8%. The market was expecting in these harsh economic conditions, a modest July 0.3% contraction.

This follows an equally robust Q2 New Zealand retail figure yesterday that astonished the market by more than doubling expectations to 1.3%. A key driver of this post-World Cup contraction was a significant boost to motor vehicle purchases. This has economists speculating that consumer spending is not only trending upward, but if vehicle sales are anything to go by, then Kiwi's are showing growth is broadly in-line with labour earnings. Oddly enough the Kiwi dollar remained subdued over this news.

We open today at US 0.8050 and should continue to dig our heels in despite a clear slowing down of the world's economies such as Japan, Italy and Spain. Our Euro position of 0.6510-50 will hold firmly until such time as the Eurozone Central banks return from their holidays. After sheepish German (0.3%) & Eurozone (-0.2%) QoQ GDP late last night I envision 'risk appetite' will hold and the NZDEUR cross will keep its head over e65c a little longer.

© Scoop Media

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