New Zealand Retail Sales Ex-Inflation for the second quarter (Q/Q, Q2) arrived at -14.6% vs expectations of -15.0% and prev -0.7%, putting sales 14.2 percent lower on the year.

Sales values drop to historic levels, Twelve of the 15 industries had lower sales in the June 2020 quarter compared with the June 2019 quarter. The result was heavily impacted by the Covid-19 lock-down of the economy in April. As the alert level was dialed back through the quarter, spending did pick up. However, that did not offset the loss of spending in April, or the loss of international tourists. The decline in spending was widespread but heavily centered on areas associated with hospitality and tourism. For instance, spending on accommodation and hospitality was down 40%. Spending on durable items like furnishings and apparel was down around 10% to 20%. The only category that held up was spending on groceries.

The corona virus (COVID-19)-led economic slowdown was also portrayed in the monthly New Zealand Credit Card Spending, down 5.8% in July, The Retail Sales ex-Autos grew 0.6% during the first quarter (Q1) of 2020 on a QoQ basis.

There are vulnerabilities masked by the weakness in the US dollar and at closer inspection, the NZD has actually been under-performing the dollar bloc ever since the last Monetary Policy Statement., (MPS). In fact, the kiwi has been the worst-performing G10 currency year to date. At the previous MPS on the 12th of August, the Reserve Bank of New Zealand’s message was extremely dovish.

The pandemic’s resurgence in the Pacific nation, coupled with the RBNZ’s recently dovish tone, downbeat data is likely to exert additional pressure on the NZD/USD prices. However, the market already knows that the negative outcome will arrive and hence the quote’s declines will be for a short time and may not push RBNZ towards any major decision-making.

NZD/USD 4 Hour Chart:

Support: 0.6523 (S1), 0.6503 (S2), 0.6490 (S3).

Resistance: 0.6556 (R1), 0.6569 (R2), 0.6589 (R3).

Considering all the negative data for the bird. We expect a bearish trend for NZD/USD.