NZD/USD consolidates above 0.5850 on risk appetite, Fed cuts hopes

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New Zealand Dollar holds a moderately positive tone against the US Dollar on Monday, extending the rebound from Friday’s lows sub-1.5800 to the upper range of the 1.5800s.

The New Zealand Dollar appreciates against the US Dollar following Trump's dovish pivot.
Powell rattled markets on Friday, opening the doors for interest rate cuts.
New Zealand's stronger-than-expected retail sales figures have provided an additional supoport to the NZD.

New Zealand Dollar holds a moderately positive tone against the US Dollar on Monday, extending the rebound from Friday’s lows sub-1.5800 to the upper range of the 1.5800s. A softer Dollar amid rising hopes of Fed cuts and the upbeat New Zealand retail consumption data is keeping the NZD buoyed.

The Greenback remains depressed on Monday after a sharp reversal last Friday, following dovish comments from the Federal Reserve Chairman, Jerome Powell, at the Jackson Hole meeting of central bankers.

Powell, for the first time this year, showed higher concerns for the downside risks to the economy than for the inflationary impact of tariffs to acknowledge that the bank will be forced to adopt a less restrictive monetary policy to support economic growth.

Powell’s change of tone boosted investors’ hopes that the bank will cut rates in September, which triggered a risk-on reaction that is still going on on Monday.

In New Zealand, domestic data contributed to underpinning support for the Kiwi. The second quarter’s Retail Sales have shown a steady consumer spending with a 0.5% quarterly growth from the 0.8% reading seen in the previous quarter, beating expectations of a slowdown to 0.2%

Economic Indicator

Retail Sales (QoQ)

The Retail Sales data, released by Statistics New Zealand on a quarterly basis, measures the volume of sales of goods by retailers in New Zealand. Changes in Retail Sales are widely followed as an indicator of consumer spending. Percent changes reflect the rate of changes in such sales, with the QoQ reading comparing sales volumes in the reference quarter with the previous quarter. Generally, a high reading is seen as bullish for the New Zealand Dollar (NZD), while a low reading is seen as bearish.

Why it matters to traders?

The quarterly release of Retail Sales by the Statistics New Zealand directly reflects on the country’s consumer spending. Stronger sales could drive inflation higher, leading the Reserve Bank of New Zealand (RBNZ) to hike interest rates so as to maintain its inflation-containment mandate. Thus, the indicator impacts the New Zealand dollar significantly. A better-than-expected print tends to be NZD bullish. The data is published about a month and a half after the quarter ends.

Economic Indicator

Retail Sales ex Autos (QoQ)

The Retail Sales data, released by Statistics New Zealand on a quarterly basis, measures the volume of goods sold by retailers in New Zealand excluding the sector of motor vehicles and parts. Changes in Retail Sales are widely followed as an indicator of consumer spending. Percent changes reflect the rate of changes in such sales, with the QoQ reading comparing sales volumes in the reference quarter with the previous quarter. Generally, a high reading is seen as bullish for the New Zealand Dollar (NZD), while a low reading is seen as bearish.