New Zealand retail sales beat expectations for Q2 at 3.3% vs 2.5% anticipated
Covid lockdown extended to end of month in New Zealand after cases increased
NZD/USD rises back above wedge resistance after bullish engulfing candlestick
TUESDAY‘S ASIA-PACIFIC OUTLOOK
The risk-sensitive New Zealand Dollar is moving higher versus the US Dollar as markets shift back into risk assets. New Zealand’s second-quarter retail sales figure crossed the wires at 3.3% on a quarter-over-quarter basis this morning, up from a revised 2.8% in the first quarter. The median expectation from economists was 2.5%, according to a Bloomberg survey. The upbeat economic data may help underpin newfound Kiwi Dollar strength.
However, New Zealand extended its lockdown until the end of this month as the government stuck to an elimination strategy after 35 people tested positive on Monday. Last week, the US Dollar surged to fresh 2021 highs after traders started to price in more aggressive Fed tightening policy. A sharp rise in Covid cases worldwide, driven by the Delta variant, also sent haven flows into the Greenback. Those concerns appeared to have eased.
Elsewhere, stocks on Wall Street benefited from the broader risk-on move in markets. The United States is starting to see optimistic signs for case figures in Delta hotspot areas. Moreover, the Food and Drug Administration (FDA) granted full approval to the Pfizer-BioNTech Covid vaccine for ages 16 and up. Health policy experts believe this will help encourage vaccine hesitant groups to get the jab, which would help further bolster the nations collective immunity versus Covid.
Tuesdays Asia-Pacific session will continue digesting New Zealand retail sales figures as the economic calendar for the remainder of the session is rather light. South Korean consumer confidence for August ticked lower to 102.5 from 103.2. Later today, Thailand will report new car sales for July, and the Philippines may release budget data between now and August 25th. Traders have their eyes on the Jackson Hole Economic Policy Symposium later this week when Fed Chair Jerome Powell will speak.
NZD/USD TECHNICAL OUTLOOK:
NZD/USD rose back above the upper bound of a Rising Wedge pattern that resulted in a breakout a few weeks ago before falling near the 50-day Simple Moving Average (SMA). A Bullish Engulfing candlestick on the four-hour time frame pointed at the potential for a trend reversal late last week, which gave rise to the current move higher. The 50-day SMA may provide resistance to the upside.
NZD/USD FOUR-HOUR CHART
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