NZDUSD Slides on Slower Services Sector, Retail Sales
New Zealand dollar gains were non-existent on the session, following the currency’s slide from an overnight 79.14 high. Perpetuating the session’s losses was a relatively disappointing Bank of New Zealand – Business NZ Performance of Service Index survey. Although the report showed an expansion in the country’s services sector, the pace of growth was the slowest since July of last year. For the record, October readings rose to 50.6, falling from September’s 52.9.
Leading the monthly declines was a 1.5 point fall in the new orders subcomponent – which showed a 54.1 reading. In addition, both employment and confidence readings contracted on the month, in line with previous estimates.
The negative survey overshadowed a rather optimistic retail sales report released a few minutes later. According to Statistics New Zealand, retail sales in the third quarter surged to more than previously estimated. For the July to September period, sales growth achieved a 2.2% pace. This is about 4 times the average market estimate of 0.6% and double the previous quarter’s revised 1% advance. Core sales improved by a rosier 2.4% boosted by sales growth in almost 87% of the report’s categories.
Although widely optimistic for the Pacific economy, the figure is seemingly being skewed by advanced purchases ahead of the the Rugby World Cup – which was hosted by New Zealand. As a result, some in the market are convinced that these latest findings are nothing but an anomaly – increasing the likelihood that RBNZ Governor Alan Bollard will keep rates at a record low of 2.5%.
As a result, the NZDUSD currency pair slid to trade at 0.7795 currently, down almost 1.48% on the session.