Extended NZ lockdown to overshadow strong retail sales and keep NZDUSD suppressed
Tony Sycamore August 23, 2021 12:37 AM
The grey clouds that enveloped New Zealand last week and caused the RBNZ to defer its highly anticipated rate rise on Wednesday have darkened today.
Following the one single case that plunged Auckland into lockdown, the New Zealand Ministry of Health has announced 35 new cases of COVID-19 in the community today, bringing the total number of cases in the current outbreak to 107.
In an update this afternoon, Prime Minister Jacinda Ardern and Director-General of Health Dr. Ashley Bloomfield confirmed that the current level four lockdown, originally scheduled to end at 11.59 pm Tuesday, would be extended until Midnight Friday night. The decision will be reviewed on Friday, and an update will be given in the afternoon.
The news of the lockdown extension will go some way towards reducing the impact of the release of what is expected to be a firm Q2 retail sales number tomorrow at 8.45 am Sydney time.
Despite the strong inflationary pressures in the quarter, real sales volumes are expected to rise a solid +2.5% in Q2, following a 2.5% rise in the first quarter of 2021.
A second consecutive strong print will confirm that the economy was on a strong footing before the lockdown and undoubtedly strengthen the RBNZ’s resolve to lift rates, presuming the outbreak is contained relatively quickly.
After a four-day 250 pip fall that included fresh cycle lows on Friday near .6800c, the NZDUSD reached oversold levels. In the short term, a bounce-back towards resistance near .6880/00 would not surprise before the next leg lower towards .6720/00 begins.
Aware that a break and close back above resistance at .6920ish is required to put the NZDUSD back on more solid footing and avert the near-term downside risks.
Source Tradingview. The figures stated areas of August 23rd, 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.