Extended NZ lockdown to overshadow strong retail sales and keep NZDUSD suppressed
Tony Sycamore August 23, 2021 12:37 PM
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
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.