Retail spending in New Zealand is anticipated to drop another 0.5% in February as households face a weakening labor market paired with falling home prices, and the outlook for growth and inflation remains bleak as private-sector spending accounts for more than half of the economy.
Trading the News: New Zealand Retail Sales
Time of release: 04/13/2009 22:45GMT, 18:45 EST
Primary Pair Impact : NZDUSD
Expected: -0.5%
Previous: -1.1%
January 2009 New Zealand Retail Sales
| Private-sector spending dropped another 1.1% in January following the 0.7% decline in the previous month, and conditions are likely to get worse as the region faces its worst recession in over a quarter century. The breakdown of the report showed that auto sales plunged 11.0% from the previous month, while gasoline receipts dropped another 2.6% during the month, and the outlook for personal consumption remains bleak as households face a weakening labor market paired with fears of a deepening recession. Meanwhile, after cutting the cash rate by another 50bp to 3.00% this week, RBNZ Governor Bollard said that the interest rate is at a ‘very stimulatory’ level and expects the economy to grow in the third quarter, but went onto say that the key rate may fall by another 50bp in the month ahead as the downturn in the global economy intensifies. | |
December 2008 New Zealand Retail Sales
| Retail sales in New Zealand fell for the fourth consecutive quarter in 2008 as demands slipped another 1.0% in December to mark the worst slump on record, and the outlook for private spending remains bleak as the economic downturn in the region intensifies. A deeper look at the report showed that gasoline receipts plunged 8.4% during the month, while demands for fresh produce dropped 8.8% from the previous month, and households may continue to cut back on spending as the labor market deteriorates at a rapid pace. As a result, the Reserve Bank of New Zealand is widely expected to lower the benchmark interest by another 75bp to 2.75% next month as growth and inflation falter, and may take additional steps in the months ahead to shore up the $128B economy as the region faces a deepening recession. At the same time, Governor Bollard continued to reinforce a positive outlook for long-term growth he expects the economy to recover in the second-half of the year. | |
What To Look For Before The Release
Traders with access to market depth information via the FXCM Active Trader Platform may use it to gauge the potency of the economic data release as well as to shed some light on the market’s directional bias. Increasing volume ahead of the announcement will telegraph likely follow-through behind whatever move is to materialize, while an imbalance in available liquidity on the Bid versus the Offer side of the market will tell us the direction major institutions are likely favoring ahead of the announcement:
| Bullish Scenario:
If we see substantially deeper available liquidity on the Bid side of the market, this tells us that major price providers in the market are looking to buy the NZD against the US Dollar. Considering that close to 60% of all FX market volume is cleared through just six top banks, we see it prudent to be on the same side of the trade as major institutions and will favor a bullish bias on NZDUSD ahead of the data release. | Bearish Scenario: |
| | |
